Abstract Sourcing a company’s 10-K can provide valuable insight into the operations and position of a company from both a strategic aspect as well as a financial aspect. Key measurements on performance can be attained by the examination of a company’s 10-K and represented in terms of ratios that can signify the strengths and weakness of a company. When key measurements are coupled with management discussion of accomplishments and future growth, expectations on market share and profitability estimates can be obtained. These key measurements allow for the comparison between businesses that compete in the same industry and as such, we will be employing the use of ratios to make the comparison between Target and Walmart for fiscal year 2013. As we apply the use of ratios to measure categories such as financial position, financial performance, operational activity, and market expectations we will examine the business strategies for each company and to the extent in which those strategies influence measurement findings. Interpreting a 10-K: Comparison of Target and Walmart Companies who have publicly traded stock are required to file a 10-K annually with the U.S. Securities and Exchange Commission. This 10-K represents the business activities of the company for their fiscal period. The 10-K is usually a 150 page document that is broken into parts that include management discussion, financial statements, and footnotes. Management discussion encompasses a communication about the company’s products, strategic direction, competitors, and yearly accomplishments. The financial statements that follow include, but are not exclusive of, the income statement, balance sheet, and statement of cash flows. Lastly, the footnotes provide the detailed financial computation methods used to derive the figures shown in the financial statements. Key metrics expressed as ratios can be derived using the 10-K. These ratios provide a basis of measurement to examine performance of a company in terms of liquidity, finance operations, profitability, inventory holding periods, average markups on inventory sold, revenue, and market expectations. Using each company’s 10-K for fiscal year 2013, we will compare the performance of Target and Walmart with an evaluation of nine ratios. We will incorporate management discussions from each 10-K to rationalize the findings of ratios and distinguish the strengths that lay therein. Liquidity Liquidity is a financial measurement of a company’s ability to utilize current assets to pay off current liabilities within a 12 month period. Current assets such as cash and cash equivalents, accounts receivable, inventories, and other prepaid expenses are assets in which the company can expect to be available in the next 12 months for use in recompensing current liabilities. Current liabilities are the short-term debts incurred by the company, in such that, those debts are to be dissolved within the next 12 months. The liquidity of a company can be analyzed using two comparable ratios; those being, Current ratio and Acid Test ratio. These ratios test the company’s ability to pay current liabilities with the resources of current assets. The most commonly used ratio to test the liquidity of a company is the current ratio. The current ratio is computed by dividing current assets by current liabilities. This ratio is a significant factor looked upon closely by creditors and investors when determining to lend monies. A current ratio of one signifies an adequate balance between current assets and current liabilities. When the current ratio drops below one, it can indicate that the company may have difficulties meeting financial obligations. As we compare the current ratios of Target and Walmart we notice that Target is in a much better position to dissolve current liabilities using current assets by having their current assets exceed current liabilities. Wal Mart’s current liabilities, however, exceed their current assets; thus resulting in a challenge for Walmart to quickly resolve financial obligations should the need arise. In contrast, however, both current ratios are not exceedingly high; in that, neither company is under-utilizing company resources. The Acid Test ratio (also known as the Quick ratio) is the lesser used ratio to test the liquidity of a company, but holds merit when the liquidity of current assets is further analyzed on the basis of most or least liquid. The more liquid the asset, the quicker it can be converted into cash to pay obligations. The most liquid of current assets are cash, marketable securities, and account receivables. Marketable securities are often noted as cash equivalents and often comprise of items such as savings and treasury bills, as well as shares of stock-exchange (Jan, 2013). As marketable securities are generally not line-itemed specifically, the easiest method to calculate the most liquid of current assets is to subtract inventory and prepayment