Target’s Annual Report Project
May 24, 2014
Tim Turney
1) My Company: TARGET
2) What they do?
The first Target store opened in 1962 in the Minneapolis suburb of Roseville, Minn., with a
focus on convenient shopping at competitive discount prices. Today, Target remains committed
to providing a one-stop shopping experience for guests by delivering differentiated merchandise
and outstanding value with its Expect More. Pay Less® brand promise. Target currently is the
second largest general merchandise retailer in America.
3) The auditors:
Ernst & Young LLP As Independent Registered Public Accounting Firm-Audit and NonAudit Fees.
4) Where does the company do business?
Target has 1,789 stores in the United States, 127 stores in Canada, with 37 distribution
centers in the United States. The global outreach for Target is has three distribution centers in
Canada, 361,000 team members worldwide; most of their global locations are in India and
Canada.
5) What are the financial highlights of the current physical year?
2013
Revenues $72,596, EBIT $4229, Net Earnings $1971 (in Millions)
6) Does the Company use a calendar year? What Year is covered?
Target uses a Calendar year that does not end on December 31st, they use a year-end date
of February 2nd. 2013 is the year covered in this report, comparing it off of 2012 for
growth or decrease.
7) Does the annual report list Targets competitors?
No, but the report does give a general competitor statement. We compete with traditional
and off-price general merchandise retailers, apparel retailers, internet retailers, wholesale
clubs, category specific retailers, drug stores, supermarkets and other forms of retail
commerce. Our ability to positively differentiate ourselves from other retailers and
provide a compelling value proposition largely determine our competitive position within
the retail industry. However Target’s chief competitors would be Wal-Mart, Kmart,
Sears, and now Amazon.com
8) Net Sales =? Increase or Decrease comparison from 2012 to current year 2013.
Net sales for 2012 $5210, 2013 $3838. There is a $1372 million loss from the 2012 to
2013 year. There is a 73.6% change from each year. From Page 20 of the K report they
state: “Sales include merchandise sales, net of expected returns, and gift card breakage.
Refer to Note 2 of the Notes to Consolidated Financial Statements for a definition of gift
card breakage. The decrease in sales in 2013 reflects the impact of an additional week in
2012 and a decline in comparable sales, partially offset by the contribution from new
stores.
9) Net Income=? Increase or Decrease comparison from 2012 to current year 2013.
Net Income for 2012 $2999 2013 $1971. There is a $1028 loss from the 2012 to 2013
year. There is a 65.7% change with income from 2012 to 2013.
10) Gross Profit=? Increase or Decrease comparison from 2012 to current year 2013.
Gross Profit: 2012 $22,733, 2013 $21.436. There is a $1297 decrease from 2012 to
2013. There is a .3% change.
11) State of Inventory at the end of the year, is this an increase of decrease to last year.
Inventory 2012 $7918, 2013 $7903. There is a $15 million change in inventory, with a
.8% change from 2012 year.
12) What inventory method does Target use?
LIFO. As Stated on page 44 of the 10K report: “The majority of our inventory is
accounted for under the retail inventory accounting method (RIM) using the last-in, firstout (LIFO) method. Inventory is stated at the lower of LIFO cost or market.
13)
Compute Inventory and average days inventory on hand.
2013
2012
Cost of Merch Sold: $51,160
$50,568
Beginning Inventory $7903
$7918
Ending Inventory
$7909
$8766
2012 = 7918+7909 = $15,821/2 = $7910
2013 = 7903+8766= $16,669/2 = $8334
Inventory turnover
COMS/End In:
2012
2013
$50,568/7909 = 6.39%
$51,160/8766 = 5.83
Number of Days Avg Inventory on Hand
2012
2013
COMS: $51,160 /365= $140
$50568/365 = $138
Avg Inventory $8766-$140= $8626
$7909-$138=$7771
Number of Days sales in Inventory
$8626/$140 = 62 days
$7771/$138 = 56 days
These numbers show the in 2012, the inventory had fewer days in sales than in 2013. The
lower the number of days that inventory stays in the more efficient to manage the inventory.
2012 was a better year.
14) State of Cash End of 2012 $784 mil:
2013 $695 mil = ($89) mil change = .8% change
15) State of ending Accounts receivable Balance….
2012 $5930
2013 $5840
receivable, held for sale.
The Statement had the net account listed as credit card
16) What method is used to record bad debt.
2012 write-off $206,
2013 write-off $41
Includes net write-offs of credit card receivables prior to the sale of our U.S. consumer
credit card receivables on March 13, 2013, and bad debt expense on credit card
receivables during the twelve months ended February 2, 2013.
17) property plant and equipment.
It is an increase property and equipment net: 2013 $, 3,353
2012,$ 3,271
3,353-3,271=$82. Percentage change =97.55%
18) depreciation expense 2012, $2,142
2013,$2,223
accumulated depreciation =$4365
19) the company uses straight line method (pg.45)
20) other types of accrued liability that this company report: project cost accrual and straight
line accrual. Project cost accrual =$347
21) shares of common stock shares of common stock
Issued: 632,930,740
Outstanding:645,294,423
Shares of preferred stock issued =nil
Outstanding=nil.
22) Issue of additional stock yes
Issued as non-qualified stock.
23) Dividend paid yes there was dividend paid.
It amounted to $272
24) Ending balance of retained earnings 2013 $ 13,155
2014 $ 12,599
25) How much did the company spend on new property, plant and equipment?
2012 $3,277
2013 $ 3,453
no it did not sell.
26) Yes, it repaid existing liability.
Accrued non-current 2013, $ (9)
Non-current liability 2013, $(50)
27) The financial information provided indicates that 10k is operated well from 2011.the net
earnings increased by $70m .that is from 2011 -2012, according to the cash flow statement. But
the net earning reduced in year 2013 as compared from year 2012 by $1028. Total liabilities
declined from year 2013 to 2014 by $3610m and that was a good step towards improving the
performance of the company. Overall the company has been operating at profit though it varies
from one year to another.