1)Liquidity ratios.

Liquidity ratios measure the companys ability to pay its short-term debt (less than
one year).
a) Working capital ratio measures the amount of current assets that exceeds current liabilities. It is a $
amount and higher ratios are better.
2012 $2,357 . There was enough cash, AR, Inventory and Short-Term investments to cover current
liabilities.
2013 (1,204). The ratio is negative and means that Target was in financial difficulties while its
current liabilities exceeded current liabilities.
b)Current Ratio measures the ability of the company to cover its current liabilities using its current
assets.
2012- 1.17 The ratio is higher than 1, so the company was in a strong financial condition back in 2012.
2013 0.91 In the most recent year, the ratio was less than 1. Therefore, we could suspect a financial
difficulties of Target.
c)Quick Ratio shows the ability of the company to pay its current liabilities using the most liquid
current assets.
2012 0.54 The ratio is less than 1 meaning that Target's asset are mostly non-liquid and not easy to
convert to cash.
2013 0.16 The ratio is very low. Target's liquid assets have dropped compared to the year of 2012,
making it harder for the firm to pay off its current liabilities with current assets.
d) Defensive Interval Ratio
2)Solvency ratios show the companys ability to pay its long-term debt. Higher (%) indicate higher
risk.
a)Debt to assets ratio measures the portion of assets that is financed with debt.
2012- 66% More than half of Target's assets was financed with debt in that year. The risk was higher
than in the following year.
2013 - 64 % The ratio is lower than in previous year and is more preferrable.
b)Long-term debt to assets is the same as debt to assets but it uses only the long-term debt. We can
conclude that the most of Target's assets are financed with short-term borrowings.

2012 30% of the assets was financed with a long-term debt. The risk was higher that in the
following year.
2013- 28% of the assets was financed with long-term debt.
c)Debt to equity ratio shows the percentage of debt compared to equity.
2012- 107% Very high and risky ratio. Debt is significantly higher.
2013- 85% The ratio is less risky compared to previous year. The portion of equity has increased
compared to debt.
d)Times interest earned ratio shows the companys ability to pay its interest payments on time.
2012- 6.05 Target was able to pay its interest expenses 6 times. The higher ratio is preferrable for
investors.
2013 3.75 ratio is 2 times lower than in the previous year. Number of times target was able to pay its
interest expenses has dropped.