Target Corporation: Report on Long-Term Financing Policy and Capital Structure with an Acquisition Analysis

1732 Words Jun 18th, 2005 7 Pages
Target Corporation: Report on Long-term Financing Policy and Capital Structure with an Acquisition Analysis
Introduction
This report will be based on the Target Corporation, and will consist of two sections: 1) long-term financing policy and capital structure, and 2) an acquisition analysis. The first section will include: Target's most recent long-term financing decision; an analysis of the economic, business, and competitive background in which the financing occurred; Target's book value and market value; possible changes that would occur to Target's finance policy and capital structure if it was forced to consider re-organization and bankruptcy strategies; and finally discuss Target's international investment and financing
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Global Market Target has not yet made the transition to the global market, but it may be a worthwhile adventure. Investing long-term overseas has become much easier with more deregulation of the world's financial systems. In addition, business and communication have become so much simpler with the increase in technology that not investing in the global market is rare. Coupled with diversifying its portfolio, Target should consider opening stores globally. Target, with its additional line of business in credit cards, would be well positioned to do so. There are inherent risks with such investment business adventures, specifically with the foreign exchange. For example, if Target owns shares in Hitachi, the Japanese company, it will lose if the value of the Yen drops. This is true in any country when the value of its currency drops. Now, if Target was to open one of its Super stores in Japan, it would have to consider that revenues are influenced by currency changes and would have to adjust accordingly.

Section 2 - Acquisition Analysis This section will be a summarized report to the board of directors that will identify a synergistic acquisition candidate for Target. After careful consideration an excellent acquisition candidate would be Sears Holdings Corporation (SHC). SHC is the third largest retailer in the U.S.

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