To work with the Company that encourages creativity, quality and opportunities for advancement both in professional and pers
Activity 4 file to be done in full using Target Corporation
From stand-alone project just
A-2
B-2
B-3
C-2
D-2
D-4
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Resume – Copy (2).doc
Nidhi Garg
Mobile: +91-9999247294
Email: [email protected]
Objective:
To work with the Company that encourages creativity, quality and opportunities for advancement both in professional and personal life and uses my knowledge towards the interest of the company.
Education:
Relevant Experience:
More than 12 years teaching experience in subjects like Finance, Accountancy and Mathematics.
Six years of experience as an online tutor to US students using tools such as whiteboard and chat box.
Ongoing Engagements
Pursuing CA from Institute of Chartered Accountants of India.
Work Experience:
Undergone Apprenticeship Training in “SINO Credits & Leasing Limited”, Delhi.
· Got Exposure of Drafting Minutes of Meetings and Notices calling meetings of the Board and of the shareholders.
· Filing e-forms through the MCA-21 Portal.
· Registration of Digital Signatures.
· Acquisition of Director Identification Number (DIN).
· Making entries in Statutory Registers (301).
· Assisted in preparation of Directors’ Responsibility Statement.
· Filing of Annual Return.
· Drafting ‘Particulars of the Employees’ as required under the company law.
Computer Cognizance
Software Tools |
Tally |
Microsoft Technologies |
MS Word, MS Office, MS Power Point |
OS |
Windows Vista, Windows XP, Windows 9x. |
Achievements
· Awarded the Best Presenter Group award by the Institute of Company Secretaries of India (ICSI).
· Secured 90% in the ICSI-NIIT Programme “Understanding Information Technology in the Corporate Environment”
· Awarded a Certificate of excellence for obtaining 68% marks in the National Mathematics Olympiad.
· Awarded a Merit Certificate for being among the Top Three Performers in Class XI.
· Awarded a Certificate of Excellence in the National Science Olympiad.
· Won in the Art Competition organized in School.
Personal Details
Father’s Name : Sh. Suresh Garg
Date of Birth : 13-Nov, 1986
Marital Status : Single
Languages Known : English, Hindi
Nationality : Indian
(Nidhi Garg)
C.S.
Institute of Company Secretaries of India 2011
B.Com(Hons) 2007
Daulat Ram College
Delhi University
All India Senior Secondary School Certificate Exam (XII) 2004
Central Board of Secondary Education,
Bal Bharati Public School, Delhi 87.25%
All India Secondary School Exam (X) 2002
Central Board of Secondary Education,
Bal Bharati Public School, Delhi 77.6%
PAGE
,
ACTIVITY 4
MF620 Financial Statement Development and Analysis
Lesson 4: Long Term Financing
Activity 4: Long Term Financing (4 pages, 100 points)
Choose a publicly traded company on which to focus, modeled on the Walmart analysis in chapter 14.
Part A Project an income statement for next year for the firm based on your assessment of revenue growth, key projected financial ratios, and any other key assumptions, making sure to justify any assumptions.
1. What is your projection for net income and how does it compare with the previous year?
2. Based on your assessment of anticipated dividends, what is your projection for a change in retained earnings?
Part B Project a balance sheet for next year for the firm based on your assessment of the change in retained earnings, key projected financial ratios, and any other key assumptions, making sure to justify any assumptions. Use external borrowing as your balancing “plug.” What is your assessment of the firm’s financial needs?
Part C Based on your projection of financial needs, what recommendation would you make to the firm—for example, how to meet increased financing needs or what to do with excess financial capacity?
Grading Rubric
Please refer to the rubric on the following page for the grading criteria for this assignment.
,
STAND-ALONE PROJECT
MF620 Financial Statement Development and Analysis
Stand-Alone Project: Target Corporation
You should begin working on the Stand-Alone Project early in the course. Each lesson provides a benchmark for completing the Stand-Alone Project in a timely manner while working through the course. You will find this information in the “Stand-Alone Project Benchmark” section of each lesson.
Instructions: Target Corporation describes itself as “an upscale discounter that provides high-quality, on-trend merchandise at attractive prices in clean, spacious and guest-friendly stores.” Target has over 350,000 employees and operates over 1,700 stores in the United States. The firm recently opened stores in Canada, and—like Walmart (see chapter 14 in your text)—it has an online business component. Target also offers branded proprietary credit and debit cards.
Part A Target Corporation: ROIC
For the fiscal year ending January 31, 2012, Target’s EBIT was $5,322,* and its tax rate was 34.3 percent. Its short-term borrowings were $3,786, and its long-term debt was $13,697. In addition, the firm’s book value of equity was $15,821.
1. Estimate Target’s return on invested capital or ROIC.
Solution: ROIC=Net Income/ (Debt+ Equity)
= (5322-5322*0.343)/(3786+13697+15821)
=3496.554/33304
=10.50%
2. Compare it with Walmart’s. Are you surprised at the difference?
* All amounts related to Target are in millions of dollars, unless otherwise noted.
Part B Target Corporation: ROE
For the fiscal year ending January 31, 2012 (2011), Target had total revenues of (in millions) $69,865 ($67,390) and net earnings of $2,929 ($2,920). Its total assets were $46,630 ($43,705) and its equity was $15,821 ($15,487).
1. Estimate Target’s return on equity (ROE) for each of these two years, using the DuPont decomposition to indicate the profit margin, the asset turnover, and the firm’s financial leverage.
Solution: Using DuPont, the return on equity is as follows:
|
2012 (In millions) |
2011 (In millions) |
Revenues |
$ 69,865 |
$ 67,390 |
Net Income |
$ 2,929 |
$ 2,920 |
Assets |
$ 46,630 |
$ 43,705 |
Equity |
$ 15,821 |
$ 15,487 |
Profit Margin |
4.19% |
4.33298709% |
(Net Income/Revenues) |
|
|
Asset Turnover |
1.498284366 |
1.541928841 |
(Revenues/Assets) |
|
|
Financial leverage |
2.947348461 |
2.822044295 |
(Assets/Equity) |
|
|
ROE |
18.5% |
18.9% |
(PM*AT*FL) |
|
|
2. Why has the ROE changed?
3. How would you compare the ROE drivers for Walmart and Target?
Part C Target Corporation: Cost of Capital
According to its annual report, as of January 31, 2012, Target’s borrowing costs averaged 4.6 percent, and its tax rate was 34.27 percent. A research report estimated Target’s cost of capital at 10.5 percent. The firm had interest-bearing debt of $17,483. Moreover, Target’s stock was trading at $50.81 per share, and there were 679.1 million shares outstanding. Now, let’s assume Target’s amount of debt is also a market value estimate of the debt. Let’s also assume the current debt and equity values are at Target’s optimal capital structure.
1. Based on market value estimates, what is Target’s cost of capital?
Solution:
Market value of equity=50.81*679.1 million
=34505.071million
Market value of debt=17483
Total market value=51988.071 million
Cost of capital, kc=ke*we+kd*wd
=10.5% *(34505.071/51988.071)+4.6%(1-0.3427)*(17483/51988.071)
=7.99%
2. How does it compare to Walmart’s, and what explains the difference?
Part D Target Corporation: EVA
Earlier, you were provided with the information necessary to estimate Target’s operating profit (EBIT) after-tax, also known as NOPAT; invested capital (the book value of equity plus interest-bearing debt); cost of capital; and market value of equity. Based on this information,
1. Estimate Target’s EVA for the year that ended on January 31, 2012.
Solution: EVA=NOPAT-invested capital*kc
=5322(1-0.343)-33304*0.0799
=$835.56 million
2. Was Target adding value?
3. Did Target have a positive market value added or MVA?
Solution: MVA=Market value of firm-Invested capital
=51988.071-33304
=$18684.071 million
Yes, Target Corporation did have positive market value added.
4. How did Target’s EVA and MVA compare with Walmart’s EVA and MVA?
Part E Target Corporation: EV/EBITDA Analysis
Let’s suppose you forecast Target’s EBIT for the year ending January 31, 2013, to be $5,352, and you forecast Target’s depreciation and amortization to be $2,361. A research analyst determines that an appropriate forward-looking EV/EBITDA multiple for Target is 6.9 times. Based on this information,
1. Estimate Target’s enterprise value, or EV.
Solution:
EBITDA=EBIT+Depreciation and Amortization
=5352+2361
=$7713
EV=EBITDA*(EV/EBITDA multiple)
=7713*6.9
=$53219.7 million
2. Next, incorporating the value of Target’s debt, estimate the firm’s value of equity.
Solution: Value of equity=EV-Value of debt
=53219.7-17483
=$35736.7 million
3. Finally, based on 679.1 million shares outstanding, estimate the intrinsic value per share and compare it with Target’s stock price on January 31, 2012, of $50.81.
Solution: Intrinsic value per share=Value of equity/No. of shares outstanding
=35736.7/679.1
=$52.62
The stock as per intrinsic value is worthy of $52.62 per share. However, it is trading at a low price of $50.81.
Considering this, I would recommend buying this stock since it has a potential
4. Based on this analysis, is Target’s stock overvalued or undervalued?
Solution: Based on this, since the intrinsic value is greater than market price, the stock is currently undervalued.
Grading Rubric
Please refer to the rubric on the following pages for the grading criteria for this assignment.
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