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Electronic Data Gathering, Analysis, and Retrieval (‘EDGAR’) is an online public database from the U.S. Securities and Exchange Commission (SEC) for coordinating the mandatory filings by firms listed on the US exchanges.  Edgar website https://www.sec.gov/edgar/searchedgar/companysearch.html

This assignment requires students to utilize some simple analytical tools to understand the performance and liquidity/solvency position of a public firm, Target Corporation, which is listed on a US exchange (New York, ticker symbol: TGT).    Public firms are required to file annual return (10K as explained in note 1 below) periodically with SEC in a standardized format.  Firms are identified either by their name, ticker symbol or CIK (Target Corporation: 27419) on the SEC website, EDGAR.  Databases, like Bloomberg Professional, are available from the library where you can do some query at the workstations to find the industry average.  You must state your source if you use industry average in your analysis.

You are required to:

1 Download the excel version of the annual (e.g. 52-week ended January 28, 2023) reports of Target Corporation for the five fiscal years from 2018 to 2022. The report of interest is the year ended on January 28, 2023 (fiscal 20222) while the prior period figures (2018 to 2021) are used to develop a trend for the ratios.  See note 1 on the various types of reports available on EDGAR.

2 (a) Calculate the following ten ratios for the five years (see 1 above).  Please refer to Chap 13 (e.g. slide 69) and note 2 below for reference.

(b) Study the performance and financial position of Target Corporation over time and comment on its respective liquidity, profitability and insolvency using the ten ratios.  Include a word count (not exceeding 300 words).  Industry averages can be included but you must state your source.

Please use the format provided by the template and follow slide 69 (ch 13) when expressing these ratios. Avoid changing the sequence of the following 10 ratios.

2.1 Current ratio (for example 1.23 to 1)

2.2 Current Cash Debt coverage (for example 12.34%)

2.3 Inventory turnover (for example 1.23 times)

2.4 Gross Profit ratio

2.5 Profit Margin

2.6 Asset Turnover

2.7 Free Cash Flow

2.8 Debt to Asset ratio

2.9 Cash Debt coverage

2.10 Times Interest Earned

You may add other ratios or analysis of your own (with supporting calculations) that you believe will assist the narrative task (should not exceed 400 words even if you extend the analysis).  Don’t include the work of other people when dealing with additional ratios and ratios (other than the stipulated ratios 2.1 to 2.10) not substantiated by your calculations will not be graded.

3. Your friend wants to invest in the US market but he knows very little about it.  He wants to start with buying a share in the retail variety stores (industry classification: SIC 5331) and he has picked Target Corporation because he had experience shopping at a Target store when he traveled to the States last Christmas.   He is asking for your recommendation to help pick a stock, for him, from retail variety stores if you do not recommend Target Corporation.
Explain your recommendation (your explanations must include the analysis done in part. 2 above).  Include a word count (narratives should not exceed 300 words).

If you don’t recommend Target Corporation, you must show your supporting calculations for the other firm (from SIC5331) that you recommend. Don’t include the work of other people for the firm that you are recommending.  Work not substantiated by supporting will not be graded.

4. You may have problems classifying some of the items (especially unfamiliar items), just state your assumptions or justifications or supporting calculations, if any, to complete your tasks.  You may skip this part if this is not an issue to you.  Please see note 3 on the use of some terms.

Note 1: Financial information and periodic reporting

US public firms file annual and quarterly reports, as well as current reports when certain events occur that require prompt disclosure.  The annual and quarterly reports include financial statements for the relevant period.

Note 2: On calculating ratios

Some ratios are computed based on the simple average of the beginning period and ending period amounts.  The 10K for Target Corporation reports the 52-week ended January 28, 2023.  The beginning-of-year date should be Jan 30, 2022.  There is no beginning-of-year balance sheet.  Hence the balance sheet at Jan 29, 2022 is used as a substitute for that of Jan 30 (as after the close of business on the day, Jan 29 should not be different from the position before the start of business on the day, Jan 30).

Note 3: On some key terms

Statement of Operations = Income Statement

Statement of Financial Position = Balance Sheet

Cost of sales = Cost of goods sold

Total revenue includes both sales revenue and other service revenue

Shareholders’ Investment = Stockholders’ Equity