Table of contents
TARGET Corp ROIC vs. WACC
Target Corp vs. Industry ROIC
target Corp vs. Industry Revenue Trend
Target Corp Operating Expense vs. Industry operating expense as a percent of revenue
Target corp Operating Profit vs industry operating profit as a percent of revenue.
target Corp Economic Moat
Table of figures
Figure 1 Target Corp ROIC vs WACC; Source: Mergent Online; Annual Studies.
Figure 2 Target Corp vs. Industry ROIC; Source: Mergent Online; Annual Studies
Figure 3 Huntsman Corp. Huntsman, Eastman, Industry Revenue Trend ; Source: Mergent Online; Annual Studies
Figure 4: Huntsman Corp. Operating Expense as Percent of Revenue; Source: Mergent Online; Annual Studies
Figure 5 Huntsman Corp. operating profit as Percent of Revenue; Source: Mergent Online; Annual Studies.
Appendix A: 2005 Industry Financial Statement
Appendix B: 2006 Industry Financial Statement
Appendix C: 2007 Industry Financial Statement
Appendix D: 2008 Industry Financial Statement
Appendix E: 2009 Industry Financial Statement
Appendix F: Target Corp Income Statement
Appendix G: Target Corp Balance Sheet
Appendix H: Target Corp NAICS Code
Target is a chain of over 1,700 large discount stores that trademark brands and private-brand apparel for family, home decor, food, and everyday staples. Target primarily operates in the segments of Retail and Credit Card. The objective of the following financial analysis is to perform a systematic evaluation of data, explicate the position in the industry, and to propose alternative strategies. Target ranks number three among its competitors in the retailing industry. In recent years, the retailing industry has faced turbulent issues due to the unpredictable economic challenges. However, Target continues to maintain its objectives and core strategy. In this analysis, we will discuss Target’s return on invested capital (ROIC), weighted average cost of capital (WACC), and the company’s economic moat. These three financial tools are essential to understanding how businesses are performing financially. ELABORATE MORE TO TAKE UP MORE SPACE…REFER TO EXAMPLE …We will interpret the financial data and explain how Target is performing against its competitors and in the overall industry. The objective of our analysis is to interpret Target’s financial data and see where they stand in the general merchandise store industry.
Company ROIC vs. WACC
Target experienced growth in revenue from 2004-2008. However, expenses also increased from 2004-2009. Although revenue for Target increases, operating profit variance didn’t show an immense difference. When expenses increase operating profit decreases. Just because Target’s revenue increased doesn’t mean that there profits will increase. The operating expenses decreased the operating profits. If Target was able to put more quality control on cost, then there profits would have been higher. Target’s revenue is below the industry average. Remember, revenue does not determine profitability. Being able to control expenses will add earnings to the company’s profits. Target’s operating expenses are below the industry average. Compared to the industry, Target is in control of its expenses. For clarification, the ROIC is calculated by dividing operating profit by liabilities and equity from the previous year. This calculation will show how Target was able to effectively measure the use of the money, borrowed and owned, invested in its daily operations. Also, the ROIC interprets the company’s ability to create value in the market place. The weighted average cost of capital (WACC) is calculated by taking the after tax expenses of capital and all sources of financing which includes both the long-term debt and equity. Figure 1, shown to the left, shows the correlation between Target’s ROIC and WACC. Clearly, the money Figure 1: Taget Corp ROIC vs WACC;...
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