Please write and write up comparing and contrasting the financial analysis of the companies JCPenney and Kohls. I will post the statements below. Please include:
Sales growth in terms of percentage of increase and the numbers of stores. If you are reading the annual report, are either of the two companies adding product lines?
Look at profitability treads for gross profit, operating profit, and net income. How is the profitability changing between the two companies?
Since these are large retail stores, what is the trend in inventory growth? Are the growing the inventory are can the accommodate the sales increases with about the current amount of inventory on hand? Please compare their inventory efficiency with the inventory turnover ratios for each company.
How are the companies handling their long-term debt? What have been the debt to equity ratios in the last five years? Can you tell what has been acquired with the additional debt, if there is any?
Lastly, let’s see what the stock market thinks of each company’s performance. In what range has their share price been trading in the last five years? How has the Price to Earnings (P/E) ratio been during that time?
What has taken place with each of these companies since the Annual Statement date? Search for new releases and other business articles and publications about each company.
Please follow this format:
Sales Growth – Are Net Sales Growing? Are there any divisions or product lines growing? Does the annual report indicate the reason(s) for this? Does your directional analysis (horizontal or vertical) bear this out? Can we see the sales increase in the inventory turnover ratio?
Cost Control – are expenses in line with the change in net sales? Look at the costs, including the cost of goods sold, marketing expenses, and administrative expenses. Look at the COGS% change and the SGA% (selling, general & administrative expenses) changes. Again, support your observation with your directional analysis and/or ratios, Profitability – Look at the three levels of profits: gross margin, operating profit, and net income. How are they changing from year to year as a percentage of sales (vertical analysis)?
Cash Flow and Liquidity - Is cash increasing or decreasing. Does that make sense in light of the profits? What about the liquidity ratios? Did you find a change in the current or the quick ratio? Look at the cash flow statements. Are operations generating or consuming cash? Is the growth of inventory reasonable as compared to the growth in cost of goods sold? Look at the accounts payable turnover ratio. And don’t forget about accounts receivable and their change. Are you concerned with changes in the accounts receivable turnover ratio? Debt Levels – Is debt increasing or decreasing? Looks at the change in current and long-term liabilities in your directional analyses. What are the reasons for this change? Look at your debt ratios. Is there
anything in the annual report or outside articles to explain a significant change in debt, if you find one?
Equity and Stock Market Factors – Has common stock plus the paid-in capital on common stock increased? Has it decreased from a buyback of common stock (treasury stock)? What about the price of the stock, has it changed significantly over the years of your analysis. Look at the price to earnings ratio and the dividend yield ratio.
