Financial Accounting Report Analysis: Target Corporation 2013

This report provides a comprehensive financial analysis of Target Corporation's 2013 performance, based on the provided 10-K annual report. It begins with an overview of the information and events emphasized by Target executives, highlighting key aspects of the company's financial performance, including revenue, expenses, and profitability. The report examines how management conveys adverse information, particularly regarding the data breach that occurred during the year. A detailed analysis of Target's financial statements is included, focusing on the evolution of net income and cash flow from operations, alongside a ratio analysis to assess the company's performance. The report delves into the data breach description in the Management's Discussion and Analysis (MD&A), assessing the potential future costs and the contingent liability accrued for these costs. The report concludes with an evaluation of the estimates provided by the company, considering the justification for reporting contingent liabilities related to the data breach and other potential future costs.

Running head: FINANCIAL ACCOUNTING
Financial Accounting
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................2
Question 3........................................................................................................................................3
Question 4........................................................................................................................................5
Question 5........................................................................................................................................5
Question 6........................................................................................................................................5
Bibliography....................................................................................................................................7

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Question 1
The 10-K Annual Report that has been presented by the company for the year 2013,
shows the annual financial performance of the company for the year. The management
executives of the company have well highlighted the financial performance of the company for
the year in terms of changes that has been observed for the revenue, expenses and overall net
profitability that the company has earned for the trend period. The classification and reporting of
the various financial transactions has been well classified in respect to the accounting standards
that the company follows. Various risk factors which could affect the company on a both
operational and financial perspective have been well discussed in the analysis portion. The
executives of the company has especially discussed the key reasons and factors that were directly
related to the changes in the operations and financial performance. The management in specific
have broadly highlighted and specified the various risk factors that are well associated with the
business operations in the presented 10-K Report (Robinson, 2020).
Question 2
Adverse information’s in particular in relation to company are related to bankruptcy,
winding up of business and experiencing a set of order from County Court Judgment (CCJ),
which in turn could affect the credit score of the company (Williams & Dobelman, 2017). There
was as such no particular information or related set of events that has been observed or reported
by the company in the presented 10-k Report. However, it is important to note that the company
is undergoing a legal proceedings for the data breach that has well observed in the third quarter
of the year by the company.

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Question 3
The financial performance of the company has been well dealt with the help of key
measure or metrics of the company that were net income and cash flow statement ratio’s for the
company. The analysis would be done for the company in relation with the ratio analysis
whereby the key analysis and trend has been observed for the company.
Net Income Margin: The net profit margin for the company was around 4.17% in the year 2012
and the same has well decreased to around 2.72% in the year 2013 has been due to larger
increase in the cost of operations and expenses that are incurred by the company (Monahan,
2018).
Return on Shareholder’s Equity: The return generated on the shareholder’s equity has been
around 18.11% in the year 2013, which fell down to around 12.14% in the year 2014. The fall in
the profit base of the company has been the prime reason for the fall in the return on
shareholder’s equity.
The net income of the company has been increasing at a consistent rate in the year 2011 and
2012, however the increase in expenses which was in particular related to Data Breach lead the
company report a fall in the profitability base.
2011 2012 2013
0
500
1000
1500
2000
2500
3000
3500 2929 2999
1971
Net Income

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The cash flow from operations from the company however on the other hand saw a consistent
increase as shown below:
2011 2012 2013
0
1000
2000
3000
4000
5000
6000
7000
5434 5325
6520
Cash Flow From Operations
Financial Analysis
Particulars 2013 2012
Net Income 1971 2999
Sales/Revenue 72596 71960
Net Income Margin (%) 2.72% 4.17%
Net Income 1971 2999
Shareholder's Equity 16231 16558
Return on Shareholder's Equity 12.14% 18.11%
Cash Flow Ratio
Operating Cash Flow 6520 5325
Net Sales Revenue 72596 71960
Operating Cash Flow/Sales Ratio 8.98% 7.40%
Question 4
The data breach observed during the fourth quarter of the year 2013, was particularly due
to the experienced data breach that has been observed by the company, whereby an intruder stole
certain payment card and other guests related information from the company’s network (in
relation to a data breach). The Company in their fourth quarter for the year 2013, have well

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recorded an amount of $61 Million as a Pretax as Data Breach expenses. The company however,
expects an insurance proceeds of $44 Million for a net expenses of $17 Million ($11 Million
after Tax) or an amount that is around $0.02 per diluted shares. The above reported expenses
were included well by the company in the Consolidated Statement of Operations as a part of
Selling, General and Administrative Expenses.
Question 5
The contingent liability for the future cost that has been related to the data breach, it was
reported that the company reported around $61 Million of fourth quarter of the year 2013. The
company placed around $44 Million as expected insurance proceeds and as a net expenses of
around $17 Million. These expenses were included in the Selling, General and Administrative
Expenses.
Question 6
The estimates placed by the company well includes an accrual for the estimated amount
of probable loss that would be well related to the expected amount of payments that are related to
the card networks and claims by reason in relation to the Data Breach (Document, 2020). The
ultimate amount of these claims is well expected to include amounts for incremental counterfeit
fraud loss or theft and the non-ordinary course of operating related expenses (that include card
reissuance costs). Thus, we believe that the facts and factors that are considered by the
management are justified for reporting the facts about contingent liability in relation to data
breach, whereby neither the range nor the amount of expenses that have been incurred by the
company could be addressed.

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Bibliography
Document. (2020). Retrieved 29 February 2020, from
https://www.sec.gov/Archives/edgar/data/27419/000002741918000010/tgt-20180203x10k.htm
Eng, L. L., Tian, X., & Robert Yu, T. (2018). Financial statement analysis: evidence from
Chinese firms. Review of Pacific Basin Financial Markets and Policies, 21(04), 1850027.
Monahan, S. J. (2018). Financial Statement Analysis and Earnings Forecasting. Foundations and
Trends® in Accounting, 12(2), 105-215.
Robinson, T. R. (2020). International financial statement analysis. John Wiley & Sons.
Williams, E. E., & Dobelman, J. A. (2017). Financial statement analysis. World Scientific Book
Chapters, 109-169.