Financial Statement Comparison

Income Statement Comparison:
Target Link to Financial Statements: http://investors.target.com/phoenix.zhtml?c=65828&p=irol-SECText&TEXT=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDEwNDc0NjktMTEtMDAyMDMyL3htbA%3d%3d#fa11101_item_8._financial_statements_and_supplementary_data
Target's income statement information for the fiscal quarter ended January 29, 2011 is as follows:
-Total Revenue: $67,390,000,000
-Total Expenses: $64,470,000,000
-Net Income/Earnings: $2,920,000,000
Component Percentage of Total Expenses: 95.7%
Component Percentage of Total Expenses: 4.3%

Hershey's Link to Financial Statements: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9ODQ3MzR8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Hershey's component percentage for their total expenses is 79.2% and 20.8% for net income. Compared to Target's component percentages, Hershey's is much stronger financially. They are spending less of their money on expenses and therefore have a larger net income compared to Target.

Balance Sheet Comparison:
Target's balance sheet for the fiscal quarter ended January 29,2011:
Total Assets: $43,705,000,000
Total Liabilities: $28,218,000,000
Total Equity: $15,487,000,000

Hershey's balance sheet for the fiscal year ended December 31, 2010:
Total Assets: $4,272,732,000
Total Liabilities: $3,370,416,000
Total Equity: $902,316,000

Hershey's is more financially strong because their total equity outweighs their liabilities greatly. This means that they have more money on hand and less that they still owe.

Fiscal Period

Target became incorporated in 1902 in Minnesota. Target's business comes from two segments, retail and credit card. Their retail segment has a vast variety that is primarily driven through their online operations. They provide an easy access online Target site that allows for simple purchases from the comfort of your home. Target also offers credit cards of their own to customers, hoping it strengthens the relationship between the company and the customer. Target's fiscal period ends on January 29 of every year. The link to the site that displays the fiscal period is as follows: http://investors.target.com/phoenix.zhtmlc=65828&p=irolSECText&TEXT=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDEwNDc0NjktMTEtMDAyMDMyL3htbA%3d%3d#ge11101_item_15._exhibits_and_financial_statement_schedules I believe the management of target chose January 29 to be the end of the fiscal period because there is very little business during that time compared to the rest of the year. It is right after all of the holiday shopping which is very busy for Target so it's good to have a fiscal period after a time of high business activity.

Interest Rates

Part 1
1. APY is a percentage of interest being earned on deposited money in an account, based on the compounding method of the institution, assuming a 365 day year.
2. American Express Bank had the highest APY of 1.00% and Nova Bank had the lowest APY rate of .1%.
3. FDIC insured means that every account in a bank is insured for at least $250,000 if something were to happen to that bank.
4. Yes, I believe it is important for a bank to be FDIC insured. Putting money into a bank that isn't insured is risky especially in the economy today.

Part 2

State	City	Loan Amount	Product	Lender	APR
Wisconisin	Milwaukee	$250,000	30-year fixed	Flagstar	4.422%
Texas	Dallas	$250,000	15-year fixed	InterBank	3.375%
California	San Francisco	$250,000	30-year fixed	American-Interbank	3.918%
New York	New York Metro	$250,000	15-year fixed	Aurora Bank	3.544%
Nebraska	Lincoln	$250,000	5/1 ARM	AimLoan.com	3.118%
Michigan	Detroit	$250,000	7/1 ARM	Flagstar	3.527%

Based on the mortgage rates above, I can conclude that the current mortgage rates are very staggered depending on the product and the lender. A shorter mortgage plan has lower interest rates but require a larger payment. I can also conclude that the rates get high in more populated areas and lower in less populated areas.

Enron and Arthur Anderson

The Enron and Arthur Anderson case that led to the collapse of Enron company was the biggest corporate bankruptcy in U.S. history. This collapse is one of many that was caused by altered financial statements that later became known to the public and the stocks crashed. Before this all became known to the public, Enron appeared to be doing fenomenal. Their annual revenues in the 1990's were at around 10 billion dollars, and in the year 2000 were at 101 billion dollars. The financial statement fraud began when the company used accounting techniques such as unconsolidated partnerships and “special purpose entities” to prevent certain accounts to show up on the reports. In August of 2001, this fraud began to get noticed by the public. The CEO Jeffrey Skilling resigned for reasons unknown and the company reported its first quarterly loss in 4 years. As more fraud became known, the company did worse and eventually it was downgraded to below investment-grade status. People stopped investing and Enron had to file for bankruptcy. Billions were lost in the stock market and many questions were raised about accounting laws and regulations that may need be changed or instilled into the law.

Sources: http://fpc.state.gov/documents/organization/9267.pdf
http://articles.castelarhost.com/enron_questionable_accounting_leads_to_collapse.htm

Why Debits and Credits

A Franciscan monk by the name of Luca Pacioli developed the debit and credit system and double-entry accounting. The article explains that the words "debit" comes for the Latin word "debitum", meaning what is due, and "credit" comes from the word "creditum", meaning a loan. This is why when there is an increase in the account assets it is a debit because something is due for the increase. An increase in liablilities, however, means someone loaned you something and thus you owe them money back. There are three different theories as to why the abbreviations are DR and CR. The first is that the Latin past participles of the word are "debere" and "credere". The next theory is that they abbreviations stand for "debit record" and "credit record". The last theory is that they stand for "debtor" and "creditor".

Disclaimer

I am a high school student completing this blog as part of an assignment. Enjoy reading but understand I am still in the learning process and therefore the information below should not be relied upon.