Target Corp
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Complete a financial analysis on Target Corporation. Use all relevant rations. Make sure and include the Dupont formula, MVA, EVA, and ROIC. Use any other metrics that are important. Compare all this data to the firms' 3 to 5 year trends, industry averages, and/or industry leader. Analyze the strengths and weaknesses of Target Corp.
From this financial analysis of Target Corp., outline an action that the firm should take. Develop pro forma financial statements (balance sheet, income statement, and cash flow statement) to show the condition of the company if the action is taken. Bases on the pro forma analysis created, should the action be taken by the company? Support ideas or analyze differences.
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STEP 1
Dupont Analysis: Total asset turnover X Net profit margin;
Return on Assets = 1.65 X 4.78 = 7.89
MVA analysis:
Equity market evaluation - debt and equity invested.
$, 55,212 - $37,345 = $17,867.
Economic Value Added:
Net operating profit after taxes less (Capital X cost of capital)
$2, 787 - ($37,345 X 0.06) = 546
Return on invested capital
(Total capital/earning before interest, taxes and dividends) X 100
= 7.4%.
STEP 2
Some other indicators:
The Quick ratio is 0.77 where as the Industry figure is 0.29.
The operating margin in 7.74 whereas the industry figure is 6.50.
The net ...
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