Target Corporation: Largest Retail Company In The World

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Target Corporation – Financial Analysis My financial analysis on Target Corporation will be comparing it against its main competitor Wal-Mart which is the largest retail company in the world. Wal-Mart dominates the market with a market share of around 11.4% compared to Targets of about 2.4%. As of the financial year ending in January 31, 2015, Wal-Mart’s total assets were $203.7 billion, which makes it about five times larger than Target’s $41.4 billion (Mizayev). However using ratios will ensure that the comparison is somewhat standardized. Profitability: Target appears to be out performing Wal-Mart and also the sector from a profitability point of view. Target has a higher gross margin and net profit margin compared to Wal-Mart. This could…show more content…
• Days Sales Outstanding: The days sales outstanding calculation, measures the number of days it takes Target to collect cash from its credit sales. This calculation shows the liquidity and efficiency of a Target's collections department (MyAccountingCourse). At present Target takes 138 days (365/2.63 times) to collect cash from its credit sales. This is rather high compared to Wal-Marts 72 days (Morningstar). Target management will need to work on improving their days sales outstanding. • Payable period: This measure, tells us how quickly a company pays its suppliers The longer it takes, the more cash a company has to work with (Berman). Target takes 54.96 days to pay its suppliers compared to Wal-Mart, which takes 37.90 days. Target pays its suppliers quicker that it pays its customers that is 138 days.. This should be a concern to management. • Days in inventory: For most companies, in particular manufacturing and retail, inventory is a very big asset as seen when calculating the current ratio. (Harrington). It shows how quickly a company sells its inventory during a given period. The longer it takes the longer the company’s cash is tied up and the greater the likelihood that the inventory will not sell at full value (Berman). Target held its goods for 62.48 days compared to Wal-Mart, which holds its goods for 44.99 days during the current

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