Financial Statements Of Target And Wal Mart Companies Finance Essay

Financial Statements Of Target And Wal Mart Companies Finance Essay

Fiscal statements are really of import to a company every bit good as other stakeholders. They serve to inform the populace and possible investors every bit good as possible investors on the public presentation of the company. This information is really of import to them to enable them do investing determinations. The authorities besides needs the fiscal statement to measure revenue enhancement liability of the company and formulate policies. The general populace and employees besides need the fiscal statements for information interest while most significantly, the direction use the studies to do determinations sing the company. There are five fiscal statements viz. : Income statement, Balance sheet, Statement of maintained net incomes, statement of hard currency flows and Notes to the fiscal statements ( Costales and Szurovy, p.8-10 ) . Due to the importance of the fiscal statements, guidelines and guidelines have been formulated such as the International Accounting Standards ( IAS ) and the Generally Accepted Accounting Standards ( GAAP ) to steer comptrollers in fixing the fiscal statements. Despite the guidelines, companies differ in the manner they prepare and present their fiscal statements. This paper seeks to demo differences and similarities in the fiscal statements of two companies: Wal-Mart Stores Inc. and Target Corporation. The fiscal statements to be compared in this paper are balance sheets, income statements and statements of hard currency flows of the two companies.

BALANCE SHEET

A balance sheet shows the standing of a company in footings of assets ad liabilities at the terminal of a period ( Costales and Szurovy, p. 23 ) a perpendicular analysis of the balance sheet is an analysis where each component of the balance sheet is expressed as a per centum of the sum. The analysis is shown in the tabular array below:

Table 1: Vertical analysis of balance sheets of Target Corporation and Wal-Mart Stores Inc for the twelvemonth ended 01/30/2010

Component

Company

Target CORPORATION

WAL-MART STORES INC.

Cash and short term investings

4.9

4.6

Entire Receivables, Internet

17.7

2.42

Entire Inventory

16.12

19.42

Prepaid Expenses

0

1.75

Other Current Assets, Entire

2.61

0.08

Entire Current Assets

41.37

28.31

Property/Plant/Equipment, Total – Neon

56.77

59.93

Goodwill, Internet

0.1

9.45

Intangibles, Internet

0.4

0

Other Long Term Assets, Entire

0.13

2.31

Entire Assetss

100

100

Histories Collectible

14.62

17.84

Accrued Expenses

5.45

10.97

Notes Payable/Short Term Debt

0

0.31

Current Port. of LT Debt/Capital Leases

3.81

2.58

Other Current Liabilities, Total

1.55

0.85

Entire Current Liabilitiess

25.44

32.55

Entire Long Term Debt

33.98

21.32

Deferred Income Tax

1.88

3.23

Minority Interest

0

1.46

Other Liabilities, Total

4.28

0

Entire Liabilitiess

65.54

58.56

Common Stock

0.14

0.22

Extra Paid-In Capital

6.55

2.23

Retained Net incomes ( Accumulated Deficit )

29.07

39.04

Other Equity, Total

-1.3

-0.04

Entire Equity

34.46

41.44

Entire Liabilities & A ; Shareholdersaa‚¬a„? Equity

100

100

Entire Common Shares Outstanding

744.6

3786

From the tabular array above, both companies have the same type of classs of assets and liabilities. However, Target Corporation has intangible assets and other liabilities which are non at that place in the Wal-Mart Stores Inc. prepaid disbursals, short term debt and minority involvement are in the balance sheet of Wal-Mart Stores Inc but non at that place in the balance sheet of Target Corporation. Target Corporation has a higher proportion of current assets ( 41.37 % ) than that of Wal-Mart Stores Inc. ( 28.31 % ) , therefore it is more liquid. Target Corporation besides has lower short term liabilities than Wal-Mart Stores Inc which means that Target Company has less short term liabilities. The Target Corporation has a higher proportion of liabilities ( 65.54 % ) which means that the corporation is largely financed by short term liabilities.

INCOME STATEMENT

Harmonizing to Costales and Szurovy, this is the fiscal statement that shows how the company generated its income. It shows the income against the disbursals and shows the net net income, that is, income lupus erythematosus disbursals ( p. 33 ) . The chief purpose is to demo whether the company operated at a net income or at a loss for a given period. There are two types of income statements viz. individual measure and multiple-step income statements. In the individual measure, all grosss are accumulated together ; the disbursals are besides accumulated and deducted from the grosss to get at the net income. In the multiple-step format, the grosss and disbursals are broken down into classs such as gross net income, net income from go oning operation, net income from discontinued operations, income before extra-ordinary points and the net income. Both Target Corporation and Wal-Mart Stores Inc use the multiple measure formats in fixing their income statements. In the income statements for both companies, accommodations for irregular or extraordinary points are made by subtracting or adding the extra-ordinary points from the net income before extra-ordinary points to get at the net income. The irregular points can either cut down or increase the net income depending on the nature of the irregular point.

STATEMENT OF CASH FLOWS

This statement serves the intent of demoing the beginnings and applications of financess for a company ( Costales and Szurovy, p. 41-42 ) . It answers mystifiers such as inaccessibility of hard currency when a company has made net incomes. The Target Corporation has a hard currency flow from runing activities of US $ 5,881 Millions against its net income of US $ 2,488 1000000s. The hard currency flow from runing activities of Wal-Mart Stores Inc is US $ 26,249 1000000s against a net income of US $ 14,335 1000000s. Both companies are pull offing their hard currency good because they have positive hard currency from operating activities which is besides higher than the net income for each company. The two companies have fiscal flexibleness due to the positive hard currency flow from operating activities.