Target Corporation: ROE
For the fiscal year ending January 31, 2012 and January 31, 2011, Target had total revenues of (in millions) $69,865 for 2012 and $67,390 for 2011 and net earnings of $2,929 for 2012 and $2,920 for 2011. Its total assets were $46,630 for 2012 and $43,705 for 2011 and its equity was $15,821 for 2012 and $15,487 for 2011.
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.
2. Why has the ROE changed?
3. How would you compare the ROE drivers for Walmart and Target?
quick note: Walmart ROE in 2012 was 22.0 % and in 2011 was 23.9 %