Introduction
Target Corporation is an example of a publicly traded company that specializes in retail. It is the seventh most significant retail corporation in the US among the companies with the most employees. There are several formats in which Target Corporation works, including the small-scale stores that are called TargetExpress or City Target, the hypermarkets named SuperTarget, and the discounters called Target (“Corporate overview” 1). The statistical information about the company’s financial development states that Target Corporation is stable and a safe choice for potential investors.
Total Revenue, Gross Margin and Net Income
The financial data available on the official website of Target Corporation shows that the business performance is stable and constantly improving. Even though the income growth and other related financial details are not dramatic, they still positively affect the performance. The company’s net income in the recent year (2022) is US$2.780 billion (“Corporate overview” 1). Its total revenue is US$109.1 billion, while the gross margin is 28.4% (“Corporate overview” 1).
Earnings Per Share
The company’s earnings per share are 156,30 USD, an adequate number compared to competitors like Walmart (“Corporate overview” 1). Target Corporation’s total assets are $53.335B, a 0.88% decline during the last year, and this tendency is stable (“Corporate overview” 1). This data states that the company’s financial performance is positive and does not show adverse signs of business stagnation.
Total Assets and Total Equity
The information available to investors also supports the hypothesis about the positive business performance of Target Corporation. For instance, the total equity is 11232, and the common stock in total is 38, which is a stable result (“2022 annual report” 1). Additional paid-in capital that is part of the total equity is 6608, which decreased compared to the previous year (“2022 annual report” 1). Retained earnings or the accumulated deficit is 5005, more than the previous year (“2022 annual report” 1). These facts prove the assumption about the positive image of Target Corporation for people who want to invest in this business.
Percent of Debt to Total Equity
Debt to equity ratio data for Target (TGT) during the past ten years, both current and historical, is stable, which is a sign of the company’s functioning. A measure of the financial leverage of an organization, the proportion of debt to equity is determined by dividing the total amount of debt by the equity of shareholders. For the three months ending January 31, 2023, the target debt/equity constituted 1.43, while the TGT has a 0.67 price-to-sales ratio (“Corporate overview” 1).
Turnover Ratios
The market value to earnings from operations ratio for this business is 13.77, and by 2022, the corporation will have 440.00 thousand employees (“Corporate overview” 1). From the period ending in February 2019 through 2023, Target maintained an average inventory turnover of 6.0x. After the previous five-year period, Target’s inventory turnover reached a 6.7x maximum in January 2021 (“Corporate overview” 1). This category of analysis shows the positive image of Target Corporation in the investor’s market.
Other details connected with the receivable turnover of the company support the claim about its positive business image in the market. Target’s receivables turnover reached its highest point in January 2021, compared to the previous five years, at 163.7x (“2022 annual report” 1). In 2022, the receivable turnover was 142.7x, 12.8% less; in 2023, it was 107.4x, minus 24.8%, indicating that Target’s receivables turnover dropped (“2022 annual report” 1). In January 2021, Target’s days with unsold inventory fell to a 5-year lowest of 54 days (“2022 annual report” 1).
Days inventory for Target grew in 2019 by 2.7% during two months, 0.3% during the same period in 2022, and 1.7% in 2023 (“2022 annual report” 1). However, these numbers fell 2020 by 0.7% and in 2021 by 11.9% (“2022 annual report” 1). It allows the assumption that the external circumstances that affected international business, including the pandemic, directly influenced the receivable turnover.
Method of Inventory Costing and Valuation
Inventory refers to supplies, items, and machinery connected to a company’s primary business area. Raw materials, work in progress, or completed products can all be applied to it. The fair value or the net carrying value are the measurements used to report inventory on the balance sheet.
Under US generally accepted accounting principles (GAAP), the LIFO approach is the only permitted one. Companies subject to IFRS reporting cannot employ the LIFO inventory technique. The “Last in First Out” (LIFO) inventory system states that the recent merchandise is sold first. In contrast, the inventory purchased earlier is sold last (Dasgupta, Sudipto, et al. 1189). This approach is the optimal solution for Target Corporation because it ensures its stable development.
It would be advantageous for Target Corporation to apply LIFO instead of other inventory methods. A business that uses LIFO reporting has an increased price for each product sold and a reduced annual profit throughout inflation, while costs for raw materials are rising on the market (Dasgupta, Sudipto, et al. 1190). Due to fewer tax charges, the corporation pays less in taxes overall (Dasgupta, Sudipto, et al. 1190). Another benefit of LIFO is that, especially during inflationary periods, it can give a more realistic picture of the price for each item delivered (Dasgupta, Sudipto, et al. 1190). These details make LIFO the working solution for Target Corporation.
Conclusion
The financial information about Target Corporation shows its stable business development, ensuring its strong position among competitors. The company’s ratios can be compared to those of its peers, like Walmart, which have similar business results. The company’s performance is improving gradually in a stable manner regardless of the absence of rapid growth. I would invest in Target Corporation as one of the most significant companies in the retail business, and the financial information about its performance foregrounds this idea.
Works Cited
“Corporate overview.” Target Corporation, 2023. Web.
“2022 annual report.” Target Corporation, 2022. Web.
Dasgupta, Sudipto, et al. “Inventory Behavior and Financial Constraints: Theory and Evidence.” The Review of Financial Studies, vol. 32, no. 3, 2019, pp. 1188–233.