Question

Target Corporation prepares its financial statements according to U.S. GAAP Target's financial statements and disclosure notes for the year ended February 1, 2020, are available here. This material is also available under the Investor Relations link at the company's website (www.target.com). Required: 1-a, What amount ($ in millions) does Target report for net property and equipment for the year ended February 1, 2020? 1-b. What is the largest category of property and equipment reported on the face of the balance sheet? 2-a. What amount ($ in millions) of cash was used in the fiscal year ended February 1, 2020, to purchase property and equipment? 2-b. Is this an increase or decrease compared to the previous year? 3. Do you think a company like Target would have more research and development costs or more advertising costs? 4-a. What is Target's fixed-asset turnover ratio for the fiscal year ended February 1, 2020? 4-b. What is the ratio intended to measure? 5. Does Target include any intangible assets in total assets? (Hint: See Notes 11 and 12.).

Answer 1

1-a. Net property and equipment as of February 1, 2020, is $30,222 million.

1-b. The largest category of property and equipment is "Property, plant, and equipment" with a net value of $24,960 million

2-a. $2,919 million of cash was used in the fiscal year ended February 1, 2020, to purchase property and equipment.

2-b. This is an increase of $57 million compared to the previous year.

How to solve

From Target's balance sheet for the year ended February 1, 2020, the following information is relevant:

Property, plant, and equipment - gross $56,800,000,000

Less: Accumulated depreciation and amortization $26,578,000,000

Net property, plant, and equipment $30,222,000,000

Therefore, Target reports net property and equipment of $30,222 million for the year ended February 1, 2020.

1-b. The largest category of property and equipment is "Property, plant, and equipment" with a net value of $24,960 million.

2-a. $2,919 million of cash was used in the fiscal year ended February 1, 2020, to purchase property and equipment.

2-b. This is an increase of $57 million compared to the previous year.