OMM 622 Week 2 DQ 2 ( Understanding the Notes to the Balance Sheet ) ~ 2 Different Answers To Help You Score Better ~ ( Latest Syllabus – Perfect Tutorial – Scored 100% )

Understanding the Notes to the Balance Sheet
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. 
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 million 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 to more than 50 years. Certain leases also include options to purchase the leased property.

Future minimum lease payments required under non-cancellable 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.

Respond to at least two of your classmates’ posts.

 

THIS TUTORIAL INCLUDES TWO ANSWERS FOR THE  DISCUSSION QUESTION  TO HELP YOU SCORE BETTER

   

Link to other tutorials for OMM 622, just click on Assignment/Discussion name to go to respective tutorial. ·          OMM 622 Week 1 Assignment ( 10-K Ford Motor Company  )

·          OMM 622 Week 1 DQ 1 ( Contents of an Annual Report  )

·          OMM 622 Week 1 DQ 2 ( Financial Statement Analysis  )

·          OMM 622 Week 2 Assignment ( Balance Sheet – Ford Motor Company  )

·          OMM 622 Week 2 DQ 1 ( The Balance Sheet  )

·          OMM 622 Week 2 DQ 2 ( Understanding the Notes to the Balance Sheet  )

·          OMM 622 Week 3 Assignment ( Income Statement – Ford Motor Company  )

·          OMM 622 Week 3 DQ 1 ( Income Statement  )

·          OMM 622 Week 3 DQ 2 ( Analyzing an Income Statement  )

·          OMM 622 Week 4 Assignment ( Cash Flow Statement – Ford Motor Company  )

·          OMM 622 Week 4 DQ 1 ( The Statement of Cash Flows  )

·          OMM 622 Week 4 DQ 2 ( Analyzing the Statement of Cash Flows  )

·          OMM 622 Week 5 Assignment ( Auditing  )

·          OMM 622 Week 5 DQ 1 ( The Quality of Financial Information  )

·          OMM 622 Week 5 DQ 2 ( Conflicts With GAAP  )

·          OMM 622 Week 6 Assignment ( Financial Statement Analysis  )

·          OMM 622 Week 6 DQ 1 ( Financial Ratios  )

·          OMM 622 Week 6 DQ 2 ( Financial Analysis  )

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