Your Perfect Assignment is Just a Click Away
We Write Custom Academic Papers

100% Original, Plagiarism Free, Customized to your instructions!


Do Understanding the Notes to the Balance Sheet Discussion and reply to Edward discussions

Do Understanding the Notes to the Balance Sheet Discussion and reply to Edward discussions

Understanding the Notes to the Balance Sheet Discussion:
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.
References for week:
Required Resources
Epstein, L. (2014). Financial decision making: An introduction to financial reports [Electronic version]. Retrieved from
Chapter 2: The Balance Sheet
Ford Motor Company. (2014). Ford Motor Company 2012 annual report (Links to an external site.)Links to an external site.. Retrieved from
Harper, D. (n.d.). Financial statements: The system (Links to an external site.)Links to an external site.. Investopedia. Retrieved from
Liz is confused by Tom’s comment because she did not take into fact what is mentioned in the note section on the balance sheet regarding future obligations. “Long-term debt—current maturities shows the amount the company will have to pay on the interest and principal due in the next 12 months for long-term debt borrowings” (Epstein, 2014, p. 2.1). On Target’s 2008 balance sheet it shows within the note section about their future lease payments from 2008 to 2011 and the amount totals to 3694(millions). Not to mention that the minimum payments for each year are only listed, which means the leasing payments could be higher. The note section mentions the capital lease expense as well which are the finance charges applied from the property owner.
These financial statistics listed in the note section are not counted into the company’s long-term debt because the leasing and financing amounts for each year because they are not at a fixed rate. If the properties were to be purchased it could then be added on to the balance sheet listed under the short and long-term debt. Liz only counted the current liabilities, debt and assets, which the assets clearly state that they outweigh company debts. Once she accumulates the current minimum lease obligations, she will realize that Target’s obligations can be higher than the 74 percent number that Tom projected.
Epstein, L. (2014). Financial decision making: An introduction to financial reports. Retrieved from (Links to an external site.)

Order Solution Now

Our Service Charter

1. Professional & Expert Writers: Elite Writers only hires the best. Our writers are specially selected and recruited, after which they undergo further training to perfect their skills for specialization purposes. Moreover, our writers are holders of masters and Ph.D. degrees. They have impressive academic records, besides being native English speakers.

2. Top Quality Papers: Our customers are always guaranteed of papers that exceed their expectations. All our writers have +5 years of experience. This implies that all papers are written by individuals who are experts in their fields. In addition, the quality team reviews all the papers before sending them to the customers.

3. Plagiarism-Free Papers: All papers provided by Elite Writers are written from scratch. Appropriate referencing and citation of key information are followed. Plagiarism checkers are used by the Quality assurance team and our editors just to double-check that there are no instances of plagiarism.

4. Timely Delivery: Time wasted is equivalent to a failed dedication and commitment. Elite Writers is known for timely delivery of any pending customer orders. Customers are well informed of the progress of their papers to ensure they keep track of what the writer is providing before the final draft is sent for grading.

5. Affordable Prices: Our prices are fairly structured to fit in all groups. Any customer willing to place their assignments with us can do so at very affordable prices. In addition, our customers enjoy regular discounts and bonuses.

6. 24/7 Customer Support: At Elite Writers, we have put in place a team of experts who answer to all customer inquiries promptly. The best part is the ever-availability of the team. Customers can make inquiries anytime.