Problem
Case Study 1:
Target Corporation prepares its financial statements according to U.S. GAAP. Target's financial statements and disclosure notes for the year ended February 3, 2018. This material also is available under the Investor Relations link at the company's website.
Task:
Target's Consolidated Statement of Financial Position (its balance sheet) discloses its current assets and current liabilities. After reviewing Targets Financial Reports and Disclosures, please answer the following questions:
• What are the three components of Target's current liabilities?
• Are current assets sufficient to cover current liabilities? What is the current ratio for the year ended February 3, 2018? How does the ratio compare with the prior year?
• Why might a company want to avoid having its current ratio be too low? Too high?
• Disclosure Note 19 discusses Target's accounting for contingencies. What is Target's approach for accruing losses for litigation liabilities? Is their approach appropriate?
• In conclusion, what suggested solution will you recommend in order to improve the current ratio of Target?
The response should include a reference list. Using one-inch margins, Times New Roman 12 pnt font, double-space and APA style of writing and citations.