Financial Services Company
The purpose of this memo is to provide significant financial information of Target Corporation as well as to provide the necessary assistance to facilitate an investment decision. As per your request, I want to inform you that during the month of January I made an extensive research on a possible investment opportunity with Target Corporation. After analyzing and reviewing Target’s 2013 annual report, I am convinced that this is not the right time to capitalize on this corporation due to its current market conditions. I have developed a structured analysis of Targets’ current position in the market in order for you to evaluate this company.
Since 2013, Target has been facing some negative changes that have affected its financial wellness. According to Target’s financial statements, total stockholder equity decreased by 2% from 2013 to 2014. There was a 1% decreased in total revenues from 2013 to 2014 and a 5.7% decreased of gross profit was recorded during the same period as well. The 34.3% decreased in Net Income from 2013 to 2014 shows the actual performance of the company. Key statistics such as profitability ratios and management effectiveness ratios capture a wider view of the company achievement. Target currently has a profit margin of 2.07% which is relatively low compared to the 2.77% industry average. Likewise, Target’s 4.55% operating margin is lower than the 4.99% industry average. Target’s current quick ratio is .22 which indicates that it doesn’t have enough assets to meet its short term liabilities without having to sell its inventory. Furthermore, management effectiveness ratios indicate that its capability to attain higher returns is declining. Target currently has a low ROA of 4.52% compared to the 5.72% industry average. Moreover, Target’s ROE of 9.37% is almost half of what the industry average is; 16.45%. As a result, the equity debt ratio increased to...
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