Working Capital

Working Capital and Financial Environment paper

Target Corporation, Wal-Mart Stores, Inc

Working Capital and Financial Environment Paper

The purpose of this paper is to describe the elements of working capital for the most recent year of the two companies that I selected at the beginning of this course. The companies that are selected are: Target and Walmart.

As per the readings for this course, the working capital of any company equals to its current assets minus its current liabilities.

The working capital of a company gives investors the opportunity to see how efficient the company operates.

A positive working capital demonstrates that a company is able to pay off its short term liabilities on time. not being able to pay off its short term liabilities could be seen as a red flag from investors that are considering or are already investing in that company.

Target operates general merchandise stores in the United States, as of March 2007 Target operates 1501 stores.

Target reported total sales for fiscal 2006 of $59,490 million compared to $52,620 in fiscal 2005.

The consumables and commodities division contributed 32% of total sales for fiscal 2006 versus 30% for fiscal 2005. (Target 2006 annual report)

The Electronics, Entertainment, Sporting Goods and Toys divisions contributed 23% of total sales for fiscal 2006. (Target 2006 annual report)

The Apparel and Accessories divisions contributed 22% of total sales for fiscal 2006. (Target 2006 annual report)

The Home Furnishing and Decorative divisions contributed 19% of total sales for fiscal 2006. (Target 2006 annual report)

The balance sheet of Target for its 2006 Annual Financial Statement reports a total assets value of $37,349.000 with total liabilities of $21,716,000. This represents a total equity of $15,633.000. (Target 2006 Annual Report)

Their total credit card (Target visa and Target Card) was an important contributor to the company’s overall profitability. For fiscal 2006 Target reported that their credit card operation’s contribution to earnings from continuing operations before taxes was $693 million, a 53.3 percent increase from 2005. (Target 2006 annual report).

Target distributes most of its merchandise through its network of 25 regional distribution centers and four import warehouses. (Target 2006 annual report)

The Report of Independent Registered Public Accounting Firm on control over Financial Reporting for fiscal 2006, states” that Target Corporation and subsidiaries maintained effective internal control over financial reporting as of February 3, 2007, based on criteria established in Internal Control- Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).” (Target 2006 annual report)

This report acknowledged the effective internal control techniques that the organization had in effect during fiscal 2007.

Wal-Mart Company offer a variety of general merchandise at valued prices; it operates a total of 6779 stores in the United States , Argentina, Brazil, Canada, Puerto Rico, The United Kingdom, China, Central America, Japan, and Mexico.

Discount stores in the United States