Company Selection

Company Selection Paper

Team B's assignment this week was to select two different publicly traded companies in the same industry. The two companies will serve as the basis for subsequent team assignments. The two companies chosen for study are Wal-Mart and Target. This paper will provide an overview of each of the selected companies.

Date of Company Establishment

Wal-Mart was established in 1962 by Sam Walton. The first Wal-Mart store was built in Rogers, Arkansas. Wal-Mart's were gradually put up around the United States and then moving to other countries such as Japan.

Marshall Fields & Company was started in 1881, which moved to starting Dayton Dry Goods Store into the Dayton Co. The Dayton Co. enters into to the world of discount merchandising starting the first Target. Targets grew all over the United States.

Company's Products and Services

Wal-Mart has two brands of stores, the regular Wal-Mart and the Super Wal-Mart. The difference being that the Super Wal-Mart has a grocery store inside as well as all the other products. Products offered by Wal-Mart vary from automotive needs to Compacts Discs and DVD's. Family's can get households goods for kitchens, bedrooms, or patios. Wal-Mart's offer products for every household need like vacuums, mops, and brooms. Wal-Mart is an example of a one-stop shop; parents can get clothes for the kids or for adults.

Target offers products like household goods and sporting equipment. Target and Wal-Mart are similar in the items that are sold. Target offers products for families for kids of all ages, plus has shopping for adult clothing. Target offers movies, CD's, and DVD's. Target also offers vacuum cleaners, bed and bath supplies, and kitchen supplies. Target is another example of a one stop shop.

Auditing Firms

Wal-Mart and Target both had their annual audits performed by the Ernst & Young Organization. Ernst & Young performed an audit on the consolidated balances sheets and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ending on January 31, 2006 for the Wal-Mart Stores, Inc and on January 28, 2006 for the Target Corporation.

The responsibility of Ernst & Young is to express an opinion on the financial statements given by Wal-Mart and Target holding both corporations responsible that the statement being audited is accurate and true. The audits have to be in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB), which require that the audit must have sufficient evidence that the financial statements do not contain any false material. The other responsibility of the PCAOB is to review the effectiveness of Target and Wal-Mart's internal control over the financial reporting dates given by each corporation.

Financial Statements

There are four basic types of financial statements used by most small businesses and large corporations. The income statement lists the revenues and expenses for an allotted period of time. The allotted period of time usually consist of a month, quarter, or fiscal year. Next, the balance sheet is a breakdown of all assets, liabilities, and owners equity at a given point. The statement of retained earnings displays changes and trends in the owner's equity over a period. Finally, the statement of cash flows shows a breakdown of cash coming in and leaving the entity.

Both Wal-Mart and Target utilize these four basic statements to disclose their financial information to both investors and the public. On Wal-Mart's website, we can find 3 of the 4 statements. Those found are the (1) Income Statement, (2) Balance Sheets, and (3) the Statement of Cash Flows. The statement of retained earnings can be deciphered in a custom document that Wal-Mart has created called the Wal-Mart Fact Sheet. The fact sheet gives a summary of the corporation's performance in an easy to read written format. (Wal-Mart.com, 2006) Target's website however, is a little different. Target combines the information from all four reports into an annual report that is prepared every year.

Wal-Mart