Target Corporation has been seeking additional capital, and the two companies that have expressed their interest, need information on the financial stability of our company. This has led to the need of writing this memo. Its purpose is to explain information to be highlighted during the meeting with each of the company’s representatives. Explained in detail are the reasons as to why the two companies need these specific details and their differences.
Lenders and debtors do need certain information to help make important decisions. This is due to a number of reasons which include the need to know whether a company is capable of making profits. The lenders also would be interested to know the financial position of the company; this will help them know the credit worthiness of the business (Nikolai et al, 2009).
The investor’s most important information is the profitability of the company. This determines whether they will invest or not. At Target corporation, revenue as well as the profits are increasing over the years, in 2009 $65,357 2008 $64,948 and in 2007 $63,367(figure are in millions). This information will give the investing company the facts it needs to determine the profitability of the company.
- Credit worthiness
On the other hand, a lender’s most important information is the credit worthiness of a business. This helps the lending company identify the form of credit to give to the business. When the credit worthiness of the business is not appealing, this may result in the revocation of the lending contract (Vause, 2009). The Target Corporation financial statements 18/8/10 quarter earnings, there is a decline in bad debts. The bad debts might put the company in a position that may repel potential lenders, but this fact suggests a positive outcome.
- Stock reports
Important information that will be provided to the investor is the stocks report. On this report, earnings per share are seen to increase over the years. This shows that the value of the share is as well rising. The investor will want to have part of the ownership of the company, this is by buying shares. When the value of the shares rises then it attracts potential investor. That is why this information is of importance to be detailed and presented to the investor.
- Net earnings
The net earning is of great importance, this is given to both the investor and the lender. The lender will want it so as he can know the company’s ability to pay back the loan. On the other side, the investor will need this information to make decision regarding the amount of resources to put into the company. This information is clearly given in the Target Corporation records. However, these records suggest a decline in the net earnings from 2007 to2008, after which it starts rising.
- Size of the business
The size of the business is of interest especially to the investor. Providing this information will help them know the kind of influence the company has towards the government as well as the society around it. The investor is keen to know what the company share distribution is; this is dependent on the size. People tend to buy shares from renowned companies; these in most cases are the massive companies with many outlets (Vause, 2009). The square area of Target Corporation has increased from the previous year, an indication of growth.
- Information about other companies
The lending company will be informed of other companies that have lent Target Corporation money. This includes those companies whose credit is cleared, such information will assist the lender determine how the company has handled past loans. Also, to be included is the current companies that are owed money by the Target Corporation. This is clearly detailed in the company’s records, it helps the lender see the progress and analyze the repayments, hence getting a clear picture of how to handle the loans.
- Other investors
The investor as well will be informed about the other investors. This will give the investing company the confidence to go ahead and invest in the company. The information should be clear as in the company’s published record books and website. This information forms a basis of reference for the investing company as it gives it a chance to get information it needs from the other companies.
The lending company will be provided with information about the assets owned by the company. This will be detailed giving the fixed assets and current assets values. This usually forms the basis of the means of deriving the security to the loan (Nikolai et al, 2009). The security to the loan is mainly made up of assets. There are current assets offering the best form security for short term loans, and fixed assets offering the best form of security for long term loans.
- Corporate governance
Target’s corporate governance will be of importance to both companies. It outlines the company’s principles and policies. The investor will want to know how the company is run, and once he becomes part of the owner, he will want to know the governing principles and policies. On the other hand, the lending company will want to know how the company’s policy handles creditors, as well as how they plan to repay the money credited to them. The lender would like to know what Target Corporation would do in case it was unable to pay back the loan; this would be included in the company’s policies.
It is therefore important that this information be prepared and organized such that each company is provided with the information it needs. This is because each company needs specific information that is different from the other. My recommendation would be to make a good power point presentation that will provide detailed information. This will help bring out clarity as we give the necessary information to these companies. We can see that not all information needed by both company is different, as some information is the same. This will help in the presentation in that both the lending and investing company can together be in the same appearance. This makes questions to be raised answered at the same time and enables Target Corporation create a rapport with the companies.