Background
Target Corporation is a giant general merchandise retailer in the United States, founded in 2002 in Minnesota. The company has stores across every state in America, including the capital city of the United States, Washington, D.C. (District of Columbia). The company is led by Brian Cornell, who has been Target’s Chairman and CEO since 2014. The company sells its retail products to clients at discounted prices using its digital channels and brick-and-mortar stores. The primary market for Target’s products is the United States. The company employs over 400,000 American citizens, and its tagline is “Expect More. Pay Less”. This report presents Target’s information based on the financial statements and disclosure notes for the year ended on January 31st, 2020, accessed from Target’s annual report.
Amount Recorded by Target Corporation
Due to its strategic location in the United States, the company has thousands of loyal clients. Even though Target has been recording significant revenues in the past years, the reports for the year that ended February 1, 2020 left a legacy in the company’s history. This is due to its excellent services to Americans during the COVID-19 pandemic, according to details from the annual report. The company’s total revenues for the year ended February 1, 2020, are $78,112 million, down from $75,356 million in the previous year (Target Corporation, 2021).
Due to the imposed restrictions to combat the COVID-19 pandemic, most companies had to change their business models to cater to their customers. In response to the pandemic, Target Corporation embraced technology to deliver excellent services to its clients across the country. The total income reached from current operations for the year ended February 1, 2020, was $ 4, 658 million. This income from these current operations increased due to the changed nature of American business. Target was the leading supplier of most consumer essentials during the pandemic, ranging from food to medicine (Target Corporation, 2021).
Due to the company’s ambition of becoming beneficial to society, it outshined its competitors by embracing technology to make deliveries to customers in the U.S. The company’s digital sales increased by 18% without affecting its total profits (Target Corporation, 2021). The fiscal year ending on February 1, 2020, broke the company’s record books due to its innovations and ability to adapt quickly to the changing business. The net income for the year reached $3,281 million, a substantial increase from $2,937 million in the previous year (Target Corporation, 2021). The teamwork, cooperation, and racial inclusivity gave Target a competitive advantage during the pandemic. The net loss for the year was an early retirement debt of $512 million (Target Corporation, 2021).
The total assets for Target reached $12,902 million. The amount broke the company’s records due to the increased demand for household consumables like food and medicine. The total loss for the year reached $512 million due to an early retirement debt (Target Corporation, 2021). The company increased its total assets due to a shift in demand from consumers in America. Consumables like food and medicine recorded higher sales, unlike those of apparel and electronics, since most people were limited to moving from their compounds in an attempt to combat the spread of the COVID-19 pandemic (Target Corporation, 2021). Lastly, the company’s equity reached $42,779 million. Target recorded positive equity due to increased sales during the year.
Target’s Fiscal Year-End
Due to Target’s business model, the company chose a Saturday near January 31st to end its fiscal year. In my view, the company chose the date due to various reasons. First, since Target is a general merchandise retailer in the U.S., the December holidays are the busiest times when sales peak. These are the busiest days of the year because of the consumers’ spending power for a holiday. Second, the company chose the nearest Saturday near January because it is the moment when the staff and the country are less busy. The company chose the date because it gives room for minimal errors that might be committed when people and staff are busy with purchases. Another reason why Target chose the date is its convenience, especially for reporting tax purposes.
Target’s Audit Report
Target sought auditing services for the fiscal year that ended on January 31, 2020. The company’s auditing committee utilized Ernest + Young LLP to present the auditing report. However, the company has been serving Target since 1931 (Target Corporation, 2021). The auditing firm’s headquarters are located in Minneapolis, Minnesota. Target received a clean audit option because Earnest and Young LLP packed the report with evidence. The auditing firm performed an audit on the inventory valuation and related sales costs because of the changes experienced during the COVID-19 pandemic. Earnest and Young LLP audited Target’s vendor income receivables due to significant assumptions made during the pandemic. The critical area discussed in the auditing report is the valuation of vendor income receivables, which were prone to significant assumptions due to overreliance on historical data. The auditing company understood the situation and performed an audit on the operating effectiveness of the company’s estimation methodology, contractual arguments, and other critical aspects of the company’s supply chain management.
Reference
Target Corporation. (2021). 2020 Annual Report Target Corporation. Target. Web.