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Statement Analysis Project -- A Comparative Analysis of Kohl’s Corporation and J.C. Penney Co
MAR12 Sec C Analysis of Kohl’s Corporation and J. Penney Corporation .C.
com). Texas based company is presently providing family apparel and footwear.000 present employees are dedicated in rendering outstanding service in the world of retail. This Plano. 30. optical.C. Kohl's Corporation presently operates 1. Penney was founded by James Cash Penney in 1902. This Wisconsin based corporation serves the Unites States via traditional and online shopping (kohls.100 department stores as of December 7. 2011 in the United States and Puerto Rico. footwear and accessories for men.com. women and children. The company was founded by Max Kohl in 1962 in Brookfield. Today.127 department stores in 49 states. exclusive and national branded apparel. beauty products and home furnishings via 1.J. It offers private. accessories. The 159. jewelries.000 employees are dedicated in leading a family-focused and valueoriented store in the United States. The company is also taking advantage of technology by making JC Penney's products available online through its Internet Web Site jcpenney. . portrait photography and custom decorating services. This more than a century old company also provides styling salon. WI.
645.391.032.000.24% $6.647.C.000 = 2.000.000 $17.000 $2.67 Current ratio Current assets Current liabilities $5.000 $2.000 Gross Profit Ratio Gross profit Net Sales $7.000.08 $6. Penney Corporation Earnings per share As given in the income statement $3.960.000.000 .370.710.Kohl's Corporation J.000.000.000.000 38.759.000 = $18.000.
979.Profit margin ratio Net Income Net Sales $1.391.000.000.000 Inventory Turnover Cost of Goods Sold Average Inventory $11.000 $2.000 Days in Inventory 365 days Inventory turnover 365 3.759.799.8 times $10.000.06% $389.114.500.8 = 96 days 365 3.500.000 $3.000 6.359.000.000.000 3.5 Receivable Turnover Ratio Net credit sales Average Net Receivables = Not Applicable Average Collection Period 365 Receivable Turnover Ratio = Not Applicable .000 = $18.000 $17.118.000.
000.000 $13.000.000 $12.38 $17.114.000.500.000.000 .811.000 = 14% $389.000 = $13.Assets Turnover Ratio Net Sales Average Total Assets $18.914.000 = $13.000 = $13.811.362.000.000 Return on Assets Ratio Net Income Average Total Assets $1.000 8% $389.000 Times Interest Earned Ratio Net Income + Int Expense + Tax Expense Interest Expense $1.000 Return on Common Stockholders' Equity Net income .042.000.000.Preferred stock dividend 1.000.759.000 $12.000.000.000.500.000 40.000.27% $7.564.000 1.000 = 13.000 Payout ratio Cash dividend declared on common stock Net income = Not Applicable $189.000 $389.582.114.000.6 832.000 231.000 Debt to Total Assets Ratio Total Liabilities Total Assets $5.362.000.462.000.000.391.000.000 $141.000.
66 $592.000 Price/Earnings ratio Market price as of 1/31/2011 EPS $50.000.00 $5.948.000 = 0.692.31 $592.000.78 $3.000 Free cash flow Cash provided by operations minus capital expenditures minus cash dividends paid = $915.977.550.000.000.000.384.67 = 13.000) Free cash flow Free cash flow per kohl's includes tax benefit from pension contribution.676.000 ($96.000.000.000 $7.119.676.000 = 0.000 $158.000 $915.000. discretionaty cash pension contribution and proceeds from sale of assets on page 15 of the 10K report $915.000.000 Current cash debt coverage ratio Cash provided by operations Average current liabilities $1.000 Cash debt coverage ratio Cash provided by operations Average total liabilities $1.500.000 $2.500.Average common stockholders' equity 7.000.000 $2.000.000 $5.44 .000.84 $32.500.000.07 $1.000.000 = $915.
41 JC Penney's gross profit ratio is better than Kohl's gross profit ratio by almost 1% (39.19% 0.J. Penney Corporation Interpretation and Comparison between the two companies' ratios (Reading the Appendix of Chapter 13 will help you) Comparing these numbers is not meaningful since the number of shares outstanding differs.95 .24%) = 39.08. JC Penney is more liquid based on the current ratio.41 in current assets for every $1 dollar in current liabilities while Kohl's has only $2.19% . $1.C.64 JC Penney has $2.38. = 2.
3.there is no accounts receivable on = Not Applicable the annual report of both companies.5 times The result of the days' in inventory is consistent with the inventory turnover.00 of JC Penney. .Kohl's is more profitable based on the profit margin ratio because it earns 6 cents for every $1.19% Kohl's inventory turnover is slightly better by .3 than JC Penney. Not applicable . This might indicate that Kohl's volume of sales in terms of inventory is better than JC Penney. The result is in favor of Kohl's.there is no accounts receivable on = Not Applicable the annual report of both companies. = 105 days Not applicable . Kohl's has the ability to sell its inventory 9 days (105-96) ahead compared to JC Penney.00 in sales as compared to 2 cents earning per $1. = 2.
14% of its assets at their book value to satisfy their obligations.14% Kohl's require to liquidate 40. JC Penney is irrelevantly better than Kohl's. = 48.39 = 3% Kohl's efficiency in the usage of its resources is reflected on the return on assets ratio as it earns 8 cents for every dollar of assets as compared to JC Penney's 3 cents earning for every dollar of assets. .6 Kohl's ability to pay its obligation is in a better position compared to JC Penney based on this ratio.59% Not Applicable . = 1. = 58.27% of its assets at their book value to satisfy their obligations while JC Penney must liquidate 58. Therefore. = 3. This ratio tells us that the stockholder's interest is larger at Kohl's compared to JC Penney. Kohl's times-interest earned ratio is significantly higher than JC Penney.Kohl's did not declare and pay dividend on 2010. Kohl's is more profitable based on this ratio.The result of this particular ratio is almost identical. = 8% Kolh's earning for every dollar invested by common stockholders is better by 6 cents as compared to JC Penney so Kohl's is more profitable based on this ratio.
Kohl's is more solvent as compared to JC Penney based on this ratio.27 JC Penney is more marketable and the public is more optimistic based on the price earnings ratio. = 22.20 Kohl's 66 cents in cash provided by operation in relation to average current liabilities is better than JC Penney's 20 cents so Kohl's is more liquid based on this liquidity ratio. . Kohl's has the advantage on this = ($96.000.Kohl's has $915M in free cash flow while JC Penney has -$96M based on the provided solution but $158M if based on the computation provided by the annual report. = $158. Therefore. = 0.000) particular ratio.000. Regardless.08 Kolh's 31 cents in cash provided by operating activities for every dollar in average total liabilities is stronger that JC Penney's 8 cents for every dollar of average total liabilities.000 = 0.
6 vs 3. The free cash flow and the cash debt coverage ratio are both good measurements as well because both results significantly favor Kohl's with $915M free cash flow as compared to JC Penney's $158M and 23 cents advantage in cash provided by operating activities for every dollar in average total liabilities. Kohl's earnings for every dollar invested by common stockholders is better by 6 cents as compared to JC Penney. The result of current cash debt coverage ratio is also siginificantly in favor of Kohl's compared to JC Penney.14% 13.27% vs 58. Profitability: The profit margin ratio. If I were to invest. Kohl's is more profitable than JC Penney.06% is significantly higher than JC Penney's 2. The price earnings ratio might indicate that JC Penney is more marketable and that the public is more optimistic about the future of JC Penney but this ratio is lacking in many elements compared to the ratios that are in favor of Kohl's.Liquidity: Based on the result of the liquidity ratios like free cash flow and cash debt coverage Kohl's has better liquidity. Overall.6 for debt to the total assets ratio and the times interest earned ratio respectively. Conclusion: Kohl's is more liquid and solvent compared to JC Penney based on the analysis and I can also safely conclude that Kohl's profitability is stronger than JC Penney because majority of the profitability ratios are in favor of Kohl's. Therefore. However. Kolh's profit margin ratio of 6. Kohl's state of solvency is better than JC Penney. return on assets and return on common stockholder's equity are all in favor of Kohl's. Kohl's $915M free cash flow is significantly more than JC Penney's $158M free cash flow so this a solid basis of Kohl's advantage in liquidity as compared to JC Penney. JC Penney's gross profit ratio is slightly higher than Kohl but this is not sufficient measurement compared to various ratios that are in favor of Kohl's. . Overall. JC Penney's current assets in relation to current liabilities is more by 33 cents as compared to Kohls. These two ratios project a significant margin in favor of Kohl's. Solvency: The results of the debt to the total assets ratio and the times interest earned ratio are both in favor of Kohl's. 40. I would have to go with Kohl's at this point in time based on thie financial evaluation. the financial standing of Kohl's is better than JC Penney based on my evaluation of these two companies.19% and the difference of 5 cents in the return on assets ratio by Kohl's over JC Penney is also significant.
com/historical/default.kohlscorporation.The Appendixes of your textbook and any information you use to profile the companies should be cited as a reference http://finance.com/q/pr?s=KSS+Profile http://www.marketwatch.com http://finance.yahoo.asp?symb=kss&closeDate=01%2F31%2F2011&x=27&y=18 http://bigcharts.htm http://bigcharts.marketwatch.com/q/pr?s=JCP+Profile http://www.asp?symb=jcp&closeDate=1%2F31%2F11&x=37&y=19 .yahoo.com/historical/default.jcpenney.com/PressRoom/PressRoom02C.
e cited as a reference below. .
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