Activity Ratio
Table 1 shows Target’s main financial ratios from fiscal year of 2013 to 2017, and it will be used for Target’s profitability and risk analysis. First, the activity ratio measures a firm’s ability to convert different account into cash or sale. Target’s account receivable turnover ratios have been increased since fiscal year (FY) of 2013, which means Target is able to collect account receivable into cash very fast, and they are improving its process each year. Notices that the account receivable increases dramatically from 64.49 (in FY14) to 94.72 (in FY 15) because company was recovering from data breach in 2013. Next, inventory turnover was consistent for FY 13 to FY 15; however, in FY 16 it decreased from 6.2 to 5.8. Lastly, the account payable turnover and asset turnover were consistent for target over the four years. These show that Target had been efficiently using its asset to generate revenue and the company had been able to pay off its suppliers regularly.
Profitability Ratio …show more content…
Overall, Target’s gross margin remains steady (29%) for all four years, but the net profit margin was not the same throughout the year. This indicates that Target’s administrative expense has changed. Especially, in 2014, the net profit margin was -2.3%. Again, this is due to the data breach in 2013. Next, Target’s ROA was mainly influenced by the asset turnover ratios instead of the profit margin. Finally, the ROE fluctuates the most throughout all of the ratios. ROE has increased 5.9% from 2013 to 2016; therefore, target has shown a significant improvement in generating more profit with shareholder
Table 1 shows Target’s main financial ratios from fiscal year of 2013 to 2017, and it will be used for Target’s profitability and risk analysis. First, the activity ratio measures a firm’s ability to convert different account into cash or sale. Target’s account receivable turnover ratios have been increased since fiscal year (FY) of 2013, which means Target is able to collect account receivable into cash very fast, and they are improving its process each year. Notices that the account receivable increases dramatically from 64.49 (in FY14) to 94.72 (in FY 15) because company was recovering from data breach in 2013. Next, inventory turnover was consistent for FY 13 to FY 15; however, in FY 16 it decreased from 6.2 to 5.8. Lastly, the account payable turnover and asset turnover were consistent for target over the four years. These show that Target had been efficiently using its asset to generate revenue and the company had been able to pay off its suppliers regularly.
Profitability Ratio …show more content…
Overall, Target’s gross margin remains steady (29%) for all four years, but the net profit margin was not the same throughout the year. This indicates that Target’s administrative expense has changed. Especially, in 2014, the net profit margin was -2.3%. Again, this is due to the data breach in 2013. Next, Target’s ROA was mainly influenced by the asset turnover ratios instead of the profit margin. Finally, the ROE fluctuates the most throughout all of the ratios. ROE has increased 5.9% from 2013 to 2016; therefore, target has shown a significant improvement in generating more profit with shareholder