Target Corporation Financial Analysis

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ACC111 - Accounting Principles I Allissia Henz 8/18/2013 TARGET CORPORATION FINANCIAL ANALYSIS AND INTERPRETATION Financial analysis refers to a process individuals use to appraise the financial condition of a given firm or organization. Usually this can be done by the firm itself internal financial analysis to help it allocate resources wisely or externally by other individuals such as future shareholders, creditors, unions, competitors among others to gain a general overview of a firm’s financial condition. Among the financial ratios that are useful include liquidity, working capital current ratio among others. In this task I will calculate the working capital, turnover ratio and current ratios for Target Corporation for the years 2004 through 2006. From 2004-2006: Working Capital=Current Assets – Current Liabilities For 2006: Working capital = $14,405. - $9,508. = $4,897. For 2005: Working capital = $13,922. - $8,220. = $5,702. For 2004: Working capital = $12,952. - $8,314. = $4,638. The working capital for the year 2006 was $4,897. In 2005 it stood at $5,702. Compared to 2004 in which working capital was $4,638. It is evident that Target Corporation was capable of meeting its current liabilities since the current assets exceeded the current liabilities. The financial crisis causes the increase of the working capital between 2004 and 2005 but a substantial decline of the same between 2005 and 2006. Current ratio 2002 – 2004: Current ratio = Current assets/Current liabilities 2006 Current ratio = $14,405./$9,508. =1.52:1 2005 Current ratio = $13,922./$8,220 =1.69:1 2004 Current ratio = $12,952./$8,314. =1.56:1 Just like the working capital Target Corporation current ratio slightly increased between 2004 and 2005 reaching 1.69:1 but declined between 2005 and 2006 to stand at 1.52:1. From these

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