Understanding the Notes to the Balance Sheet

Nov 6th, 2013
Business & Finance
Price: $10 USD

Question description

Your friend, Liz, loves to shop at Target and is now interested in investing in the company. Tom, another friend, has told her that Target’s debt structure is risky with obligations of nearly 74% of total assets. Liz sees that debt on the balance sheet is 65% of total assets and is confused by Tom’s comment. Write an explanation to Liz discussing the debt structure of Target and why Tom thinks Target is risky. Be sure to explain clearly what information appears on financial statements, as well as what information does not appear directly on the financial statements. Use the information below in your discussion and respond to at least two of your fellow students’ postings. At fiscal year-end February 2, 2008, Target Corporation had the following assets and liabilities on its balance sheet (in millions): Current liabilities $11,782 Long-term debt 15,126 Other liabilities 2,345 Total assets 44,560 Target reported the following information on leases in the notes to the financial statements: Total rent expense was $165 million in 2007, $158 million in 2006, and $154 in 2005, including percentage rent expense of $5 million in 2007, 2006, and 2005. Most long-term leases include one or more options to renew, with renewal terms that can extend the lease term one to more than fifty years. Certain leases also include options to purchase the leased property. Future minimum lease payments required under noncancellable lease agreements existing at February 2, 2008, were: Future Minimum Lease Payments (in Millions) Operating Leases Capital Leases 2008 $ 239 $ 12 2009 187 16 2010 173 16 2011 129 16 2010 123 17 After 2010 2, 843 155 Total future minimum lease payments $3694 (a) $232 Less: Interest (b) (105) Present value of minimum capital lease payments $127 (c) a) Total contractual lease payments include $1,721 million related to options to extend lease terms that are reasonably assured of being exercised, and also include $98 million of legally binding minimum lease payments for stores that will open in 2008 or later. (b) Calculated using the interest rate at inception of each lease. (c) Includes current portion of $4 million.

Tutor Answer

(Top Tutor) Daniel C.
School: Carnegie Mellon University

Studypool has helped 1,244,100 students

Review from our student for this Answer

Nov 8th, 2013
"<3 it, thanks for saving me time. "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1823 tutors are online

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors