TARGET CORPORATION FINANCIAL ANALYSIS AND INTERPRETATION Essay

TARGET CORPORATION FINANCIAL ANALYSIS AND INTERPRETATION - Essay Example The  ratio  is  mainly  used  to give an idea of the companys ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. Target is 1.32 suggesting that it would be able to pay its debt .32 more than is owed. However, Wal-mart size require much more debt to finance it operations. Wal-Mart .85 is not the best financial position, buy it may be because the company has a longer inventory turnover than Target. Wal-Mart is by its very nature a company with huge warehouse of inventory and other current asset. Target, on the other hand is a smaller operation. Asset Turnover reflects a company’s ability to use its assets to generate sales and is an important indication of operating efficiency. It tells the analyst how many dollars of sales a company generates for each dollar invested in assets. It is computed by dividing net sales by average total assets. As we can see, Asset turnover ratio for Target Corporation has gone up from 1.43 to 1.52 mostly due to increase in Net Sales. It is a good indicator of the efficiency in utilization of the assets and should be viewed positively by investors when comparing Target Corporation with its competitors like Wal-Mart