Stock Analysis on Net

Target Corp. (NYSE:TGT)

Financial Reporting Quality: Aggregate Accruals

Microsoft Excel

Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

Target Corp., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Operating Assets
Total assets 57,769 55,356 53,335 53,811 51,248 42,779
Less: Cash and cash equivalents 4,762 3,805 2,229 5,911 8,511 2,577
Operating assets 53,007 51,551 51,106 47,900 42,737 40,202
Operating Liabilities
Total liabilities 43,103 41,924 42,103 40,984 36,808 30,946
Less: Current portion of long-term debt and other borrowings 1,636 1,116 130 171 1,144 161
Less: Long-term debt and other borrowings, excluding current portion 14,304 14,922 16,009 13,549 11,536 11,338
Operating liabilities 27,163 25,886 25,964 27,264 24,128 19,447
 
Net operating assets1 25,844 25,665 25,142 20,636 18,609 20,755
Balance-sheet-based aggregate accruals2 179 523 4,506 2,027 (2,146)
Financial Ratio
Balance-sheet-based accruals ratio3 0.70% 2.06% 19.69% 10.33% -10.90%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Costco Wholesale Corp. 11.49% -0.39% 20.71% 5.32% 2.31%
Walmart Inc. 5.23% 6.15% 0.02% 1.09% -6.44%
Balance-Sheet-Based Accruals Ratio, Sector
Consumer Staples Distribution & Retail 0.00% 6.12% 2.78% 4.30% -5.94%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Staples 0.00% 1.15% 2.58% 7.61% -0.13%

Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).

1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= 53,00727,163 = 25,844

2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= 25,84425,665 = 179

3 2025 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 179 ÷ [(25,844 + 25,665) ÷ 2] = 0.70%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, Target Corp. improved earnings quality from 2024 to 2025.

Cash-Flow-Statement-Based Accruals Ratio

Target Corp., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Feb 1, 2025 Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Net earnings 4,091 4,138 2,780 6,946 4,368 3,281
Less: Cash provided by operating activities 7,367 8,621 4,018 8,625 10,525 7,099
Less: Cash required for investing activities (2,860) (4,760) (5,504) (3,154) (2,591) (2,944)
Cash-flow-statement-based aggregate accruals (416) 277 4,266 1,475 (3,566) (874)
Financial Ratio
Cash-flow-statement-based accruals ratio1 -1.62% 1.09% 18.64% 7.52% -18.12%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Costco Wholesale Corp. 2.33% 1.10% 14.69% -2.96% -7.15%
Walmart Inc. 3.34% 0.87% 0.47% -3.77% -10.19%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Consumer Staples Distribution & Retail 0.00% 1.06% 3.13% -0.42% -10.54%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Staples 0.00% -0.17% 2.27% 4.81% -4.89%

Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).

1 2025 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -416 ÷ [(25,844 + 25,665) ÷ 2] = -1.62%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, Target Corp. deteriorated earnings quality from 2024 to 2025.