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Target Corporation prepares its financial statements according to U.S. GAAP. Long-term solvency refers to a company’s...

Target Corporation prepares its financial statements according to U.S. GAAP.
Long-term solvency refers to a company’s ability to pay its long-term obligations. Financing ratios provide investors and creditors with an indication of this element of risk.

Required:
1. Calculate the debt to equity ratio for Target at February 3, 2018. The average ratio for companies in the Discount Retailers industry sector in a comparable time period was 2.0.
2. Calculate Target’s times interest earned ratio for the year ended February 3, 2018. The coverage for companies in the Discount Retailers industry sector in a comparable time period was 6.9.

data can be found on Target's website. 2017 annual report. https://corporate.target.com/annual-reports/2017/10-K/10-k-cover

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Answer #1

1. Debt to Equity Ratio = Total Liabilities / Total Equity
= (13201+14089)/11709 = 2.33

2. Times interest earned = Earnings before interest and tax / Interest
= 4312/666 = 6.47 times

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