Target Annual Report: Target Corporation That Normally

Target Annual Report:

Target Corporation that normally operates as Target is a retailing company in the United States with its headquarters in Minneapolis, Minnesota. Target mainly operates through its bullseye trademark and was ranked at position 33 in 2010 on the Fortune 500 Company listing. Since its inception, the Target experience has now grown beyond the walls of its stores as it creates a modern shopping experience to customers through personal, relevant, and rewarding connections. As shown in its annual report, the firm has adopted innovative strategies to drive its strong financial performance that create opportunities for profitable growth.

Main Sections of its Annual Report:

Since Target Corporation operates in two major segments, its 2010 financial report consists of two major sections and other segments that act as the appendices of its financial performance. These major sections are:

Retail Segment:

The firm's retail segment as of 2010 generated an increased sales of approximately 3.7% from the previous year because of the comparable-store increase of 2.1% and the contribution from these stores. This business segment provides daily essentials and fashionable merchandise to customers at discounted prices. As part of the retail segment, the integrated online business provides products that are similar to those provided in the stores except for food and some household items. This section generated sales worth $65,786 million that accounted for a gross margin of $20,061 million ("Target Corporation -- 2010 Annual Report," 2012).

Credit Card Segment:

As the second main business segment of the company, the credit card segment accounts for the second major section in Target's annual report. Similar to the retail segment, this section also generated huge profits to the company. The segment provides credit to eligible guests through Target's proprietary credit cards as well as Visa and the Target Card. The credit card section also branded the proprietary cards in order to drive incremental sales, strengthen the bond with clients, and boost the results of Target's operations. The profits of this segment increased in 2010 to an estimated $541 million from the $201 million in the previous year.

Factors that Influenced Target's Financial Performance in 2010:

Factors that contributed to Target's strong financial performance in 2010 include

Increase in Store and Store Contribution:

The increase in the number of stores and stores' contribution resulted in the increase of the retail segment's profitability, which contributed to the firm's strong financial performance in 2010. The company not only opened 13 new stores but it also re-modeled 341 stores during the same year resulting in an increase of its profit margin.

Reduction of Bad Debt Expense:

The profitability and increase in the profit margin of the credit card segment is basically attributed to the declining bad expense due to the enhanced trends in key measures of risk. The decline in bad debt expense was favorable to the company's strong improvement in credit card operations.

New Interest Expense:

The financial performance of Target Corporation in 2010 was also affected by new interest expense that includes the interest expense on non-recourse debt collateralized by the receivables of credit card. As detailed in the results of the Credit Card Segment, new interest expense decreased by 5.5% as compared to the previous years.

Provision for Income Taxes:

The effective income tax rate of the company during the same year was 35.1% from the 35.7% in the previous years. The decrease in the tax rate was mainly because of favorable resolution of several income tax matters. Since the income tax expense reduced by an estimated $100 million, it resulted in the strong financial performance in 2010.

Primary Assets Held by Target Corporation:

Assets can basically be described as items of economic value that are held by a company or an organization. By the end of 2010, the total assets of Target Corporation were estimated to be approximately $43, 705 million ("Target Corp. TGT," 2012). The primary assets held by Target Corporation are its retail stores that form an integral part of its retail business segment. The second primary assets held by this company are property and equipment assets that account for an estimated $25, 493.

Internal Control of Target Corporation:

Target Corporation consists of a comprehensive governance structure who are responsible for controlling the firm's internal environment. In order for the management to fulfill its responsibility for integrity, consistency, and presentation of information in the report, it maintains detailed systems of internal control. These systems are developed to offer reasonable assurance that assets are protected and transactions executed based on the established protocols. The internal control is usually characterized by the principle that costs of control are less than the accumulated benefits ("Governance Guidelines," n.d.).