Target Annual Report

ANNUAL REPORT ASSIGNMENT

The full name of the company I decided to research, as specified in their original charter, is Target Corporation. I originally planned to report on Nissan Motor Company, but realized that all financial statements were in Yen. I decided to choose an American company that obviously had inventory accounts. Wal-Mart of course was the first thing to come to mind, but I decided to go with Target instead.

The company’s fiscal year ends on the Saturday nearest January 31. This allows the company to better account for all operations that occurred during the holiday season and to allow time for any possible returns to filter through before preparing its financial statements.

In 2007, Target had net earnings of $2,849,000,000, but only had net earnings of $2,214,000,000 in 2008, down 22.3% from the prior year. This can be attributed to the current economic climate.

Ernst & Young LLP, independent registered public accounting firm, is the firm who audited Target Corporation. The report was dated March 11, 2009. It seems as though Ernst & Young gave an opinion that Target Corporation’s financial statements fairly presented the company’s financial disposition, but had to give an unqualified opinion on Target’s internal controls.

Horizontal analysis involves taking one item from the financial statements, and comparing that item to itself over the course of many periods. This can either give you an absolute dollar amount, or a percentage. A good example would be to take net earnings over the past 5 years and compare them to each other to come up with a growth amount or percentage. On the other hand, vertical analysis takes one item in a financial statement and compares it to other items in the financial statement. For example, you could take sales during a period, and compare it to the gross profit after selling/operating expenses and get a ratio or percent that gross profit is of total sales. You can compare this figure to other periods...