The following paper will look into the different dynamics in terms of the financial ratios as well as the policies that have been adapted by Target Retail Stores. The purpose of this study is to evaluate whether the financial statements that have been submitted by the board to the shareholders is able to be productive to the firm in the long run. It is worth noting that financial statements are geared towards making an organization realize on the amount of money they have. For instance, Retail manufacturing Company Target is known to be a global retailer and one of the best organizations that are effectively managed. The following analysis will serve to illustrate its financial statements and whether they are able to sustain on their market position.
Analysis and Comparison
Financial statements are as well vital to boards, managers, payers and lenders for they are able to determine the financial position of the organization. One of the best analyses that will be used to analyze the case of Target is ratio analysis in which there will be usage of data from the balance sheet as well as the income statement so as to generate results that can easily meet the firm’s financial objective.
Ratio and Working Capital Analysis
An efficient use in funding operations as well as the provision of returns to shareholders is an indication that Target is enjoying a working capital deficit.
Gross Profit margin as at January 2009
Gross Profit Margin = Revenue – the Cost of Goods Sold/ Revenue
(64,948.0 - 45,766.0)/ 64,948.0
=0.295 is then multiplied by 100
=29.5% is the Gross Profit margin as at January 2009
Gross Profit Margin as at January 31st 2010
Gross Profit Margin = Revenue- the Cost of goods Sold/ Revenue
=0.3025% is then multiplied by 100
=26% is the gross profit margin as at January 31st 2010
Gross Profit margin as at January 31st 2011
Gross profit margin = Revenue – The Cost of goods Sold/ Revenue
=0.309 % is then multiplied by 100
=30.9 % is the Gross Profit margin as at January 2011
The Net Profit Margin
Target is able to determine the amount of money it is able to make per dollar through the net profit margin. The net profit margin of a company is calculated by dividing the total net profit by the total sales revenue
Calculating net profit margin is Net profit/ Sales revenue multiplied by 100
Net Profit margin as at January 31st 2009 is:
2,214.0/64,948.0 multiplied by 100
Net Profit margin as at January 31st 2010 is:
2,488.0/ 65,357.0Multiplied by 100
Net Profit Margin as at January 31st 2011 is:
2,920.0/ 67,390.0 Multiplied by 100
From the statistics indicate above, it is easier to note that the operating expense of the giant store is quite high. This is as a result of the Store depending on huge sales volumes as well as lower net profit margins. We also note a steady increase in gross profit over the 3 year period. Therefore is very attractive for possible investors.