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Summary Of Target's Profitability Analysis

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This chapter it talks about the profitability analysis and interpretation, Target is the main focus of what the chapter is comparing its information to. Profitability analysis and interpretation is an important factor for any company to be effective. For Target to continuing being one of the biggest department stories, they are having to perform several financial procedures to evaluate the company’s overall performance and financial circumstances. These procedures are ratios in order to identify the profitability and asset revenue and invested capital return. Most companies are judged by its effectiveness, although analysis of profit is important. What is used most of the times is the return on equity (ROE) which it relates the level of the profitability …show more content…

When using return on equity it is the net income to the normal investment by investors as measured by total stakeholders’ equity from the balance sheet. With the return on equity it tells the company of its operating costs which is connected to the company’s income and expenditures from products and services, another use of the return on equity is the company’s debt, net of any return from nonoperating investments. In the return on net operating assets, this method is a formula used to classify the income statement and balance sheet into operating and nonoperating components so that the company can assess each separately. The company will study the operating actions on the income statement and clarify how to calculate the net operating profit after tax and then study the operating actions on the balance sheet by clarifying how to calculate net operating assets. When using the return on net operating assets which relays to the net operating profit after tax in order to average out the net operating assets for the company. Many companies use this method to calculate the balance sheet in to operating and nonoperating

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Target Corporation (TGT) is an international general merchandise and grocery retailer founded in Minneapolis, Minnesota that works to ensure that the customer is provided with the opportunity to purchase a wide variety of goods such as household products, electronics, pharmacy, personal care products, grocery goods, clothing apparel, and sporting goods in order to achieve customer satisfaction at a discounted price in order to remain competitive within the industry. The primary goal for Target is to overcome their various competitors within the industry in order to generate profit through continuous innovation and delivering outstanding value at each Target location in order to be the preferred shopping destination amongst the customer. In

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Below is the income statement for Target Corporation in 2016 (in millions). Target 2016 Revenue 69,495 Cost of Goods Sold 48,872 Gross Profit 20,623 Gross Profit Margin 29.68% SG&A Expense 13,356 Depreciation & Amortization 2,298 Operating Income 4,969 Operating Margin 7.15% Non-operating Income -- Non-operating Expenses -- Income Before Taxes 3,965 Income Taxes 1,296 Net Income After Taxes 2,669 Continuing Operations 2,669 Discontinued Operations 68 Total Operations 2,737 Total Net Income 2,737 Net Profit Margin 3.94% Diluted EPS from Continuing Operations 4.58 Diluted EPS from Total Operations 4.7 Diluted EPS from Total Net Income 4.7 Dividends Per Share 2.32 The $5 million would be additional issued stock that is used to raise capital for major expansions of the company.

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Section A: Business Overview 1) Target’s 10k report for the Fiscal Year ending January, 28th 2017. https://www.sec.gov/Archives/edgar/data/27419/000002741917000008/tgt-20170128x10k.htm 2) Target first opened its doors in 1902 in the suburbs of Minneapolis, Minnesota and has since grown to 1,828 locations across the United Sates. In addition to their physical locations, Target is now available to more than 200 countries and territories on their website, http://www.target.com/. This discount retail store provides a wide range of merchandise varying from groceries to home goods and attire in addition to many exclusive brands and collaborations. With more than 300,000 employees worldwide and 40 distribution centers in the United Sates, Target

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Target is ubiquitous as it accessible through mobile devices, desktops, laptops, tablets, etc. Ubiquity is essential in today’s day and age in which m-commerce is increasing in popularity. Such popularity is due in part to the fact that ubiquity reduces transaction costs for the consumer- the costs of participating in a market (Laudon & Laudon, n.d.). Ultimately, Target is successful in providing uninterrupted wireless access to its site. E-commerce technology permits commercial transactions to cross cultural and national boundaries far more conveniently and cost effectively than is true in traditional commerce (Laudon & Laudon, n.d.).

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What insight is provided by the new profitability analysis? What should Alice, Inc. do to enhance its profitability? In order to increase profitability we would advise Alice, Inc. to focus more on production and realization of Regular model faucets, i.e. spend more direct and indirect expenses on Regular model.

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