TARGET CORPORATION FINANCIAL ANALYSIS AND INTERPRETATION Essay - 2

TARGET CORPORATION FINANCIAL ANALYSIS AND INTERPRETATION - Essay Example This refers to how fruitful a company is in using assets. Liquidity and efficiency are significant and complement each other. To calculate a company’s short term liquidity (requirement) we need to figure out the current ratio and working capital. Working capital is the current assets less the current liabilities. To calculate the current ratio we divide the current assets by current liabilities. In looking at the objective organization’s financials for years 2004, 2005 and 2006 we can see how sound they performed over the years. 4,638 was its working capital in 2004. We got this by subtraction of current liabilities of 8,134 from current assets of 12,952. 5702 and 4817 was the working capital in 2005 and 2006 respectively. Now we have to look for the current ratio for these same periods. In 2004 current ratio for Target Company is 1.56. We got this number by dividing 12,952, which are current assets, by its current liabilities, 8,314. In 2005 and 2006 the current ratio is 1.69 and 1.50 respectively. It reflects the company’s ability how use assets to create sales. It is an important aspect in a company’s working efficiency. To calculate this we divide net sales by average total assets. Target Company the asset turnover for 2004 is 0.20. It can be determined by its net sales of 3,198 and divided by average of total assets of 15,708. The asset turnover rate was 0.15 for 2005. In years 2004, 2005 and 2006 we can see that from 2004 and 2005 there was an increase in liquidity and efficiency but in 2006 there was a fall. Although there was a fall, Targets results are not that unusual from other companies, in fact some had even bigger decreases and struggled more within the same time period. I would like to invest in the Target Corporation; with the drop from 2005 to 2006 at the overall picture the drop is not that