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Target's 2012 Financial Report

719 Words3 Pages

Target Corporation is a worldwide retail store, this industry has affected multiple competitors closing them down due to economic difficulties. Target decided to make a change on their operation module to boost sales and help them stay afloat. In the 2016 Financial Statement, Target stated that their inventory method that is currently being used. This method is called: Retail Inventory Accounting Method known as (RIM), this method it is common amongst these types of corporations because of it practicality. Target also uses the LIFO method known as Last-In, Frist-Out, this helps them stay on top of their inventory. Going over the annual report well help decide if this change has help Target to make any more changes
After reviewing Target’s 2016 Annual Report, I was able to find that Target values its inventory at the lower cost or market. This process helps figure out the new retail price of the merchandise after time. Most of the inventory changes in prices with time. They value of a product might change when the vendor increases or reduces their prices, and this will help keep they prices at the Target stores at the current market price. The …show more content…

To be able to calculate this information, we use the cost of goods sold formula: Cost of Goods Sold = Ending Merchandise Inventory ($2,737,000) + Cost of Goods Sold ($48,872,000) – Beginning Merchandise Inventory ($3,363,000) = Net Purchases $48,246,000 totaled for 2016 fiscal year. (Horngren’s Accounting pg. The strength that Target has at its benefit is the agreements they arrange with the vendors to pay as they sale. They don’t buy the merchandise from the vendor until it is sold at the retail store. I don’t see any weakness with the strategy Target Corporation uses in their accounting financials. There is another competitor that also uses the same inventory method and values its inventory at the lower cost or

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Kroger estimates that approximately 95% of their inventories in 2015 were valued using the LIFO method. Cost for the remainder of their inventories, including almost all fuel inventories, was determined using the First in First Out (FIFO) method. Kroger utilizes the Item Cost Method to determine its inventory cost before the LIFO adjustment for their store inventories. The reason Kroger employs the item-cost method of accounting is that it allows Kroger a more accurate reporting strategy for periodic inventory balances. Another reason Kroger uses this method is most of their inventory is finished goods and can recorded items at actual purchase costs.

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Below is the project balance sheet for Target Corporation in 2016 (in millions). Target 2016 Assets Current Assets Cash 2,512 Net Receivables 749 Inventories 8,309 Other Current Assets 144 Total Current Assets

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