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Comparative Analysis Of J. C. Penney's Corporation

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RATIO ANALYSIS OF J.C. PENNEY CORPORATION & KOHL?S CORPORATION Comparative Analysis by Ratio Analysis of J.C. Penney Corporation & Kohl?s Corporation Dora I. Gonzalez Devry University Abstract J.C. Penney Company, Inc. and Kohl?s Corporation are two of the largest apparel and home furnishing retailers with stores across the US and Puerto Rico. The primary objective of analyzing financial statements is to identify major changes in trends, investigate causes of underlying changes, and see the correlation of the two. Ratio analysis is a financial analysis technique which analysis the relationship among two or more line items on the financial statements. Financial ratios evaluate aspects of an entity?s operations and are …show more content…

Current ratio enables us to examine the liquidity of the business by equating the amount of current assets to current liabilities. Although current ratio fluctuates from industry to industry, is preferred to have at least one dollar of current assets for every dollar of current liabilities. Kohl's has the advantage over J.C Penney, as Kohl's current ratio is 1.87 in comparison to J.C. Penney?s ratio of 1.67. Kohl?s Corporation can pay all of its current liability and still have a positive working capital better than J.C. …show more content…

Dupont Analysis enables us to answer this question. Kohl?s Corporation Dupont analysis is 12% consisting of 4% (profit margin) x 1.41 (total asset turnover) x 2.48 (financial leverage). Compared to J.C. Penney?s Dupont analysis of -39% consisting of -4% (profit margin) x 1.34 (total asset turnover) x 7.21 (financial leverage). Kohl?s Corporation is generating sales while maintaining a lower COGS as demonstrated by its higher profit margin, and turning over large amount of sales. Although J.C. Penney Corporation has a negative profit margin, the company is heavily using their financial leverage. Although they are borrowing high amount of money to magnify profit potential, its? profit per share is -$1.68. To summarize, the company is using too much leverage, and if they continue, company could go into

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After making several calculations on both Kohl’s and JCPenny’s finical statements it is clear that Kohl’s is in a better financial position. Starting with over an 8-point gap between Kohl’s 3.50 net profit margin, to JCPenny’s -4.06 net profit margin. This proves that Kohl’s is more profitable making 3.50 dollars of income for every item sold, on average. Kohl’s is the better company to invest in but JCPenney is slowly pulling themselves out of a financial crisis. According to Investopedia, “Kohls is opening a new outlet store it calls Off-Aisles… if this concept works, which it likely will, considering consumer conditions, look for Kohl’s to ramp it up, big time.

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JC Penney’s was founded in 1902 by James Cash Penney and is now a multinational retailer, operating over 1000 department stores in 49 states and Puerto Rico. James Penney opened his original dry goods store in Kemmerer, Wyoming and named it the Golden Rule Store to emphasize his personal and business philosophy of treating others as he would want to be treated. The original dry goods store expanded to a department store, and was incorporated in 1924 in Delaware and traded on the New York Stock Exchange. JC Penney now sells a variety of family apparel and footwear, accessories, and fine and fashion jewelry.

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The recent introduction of the “fair and square” pricing model has not proved successful. Another weakness of the company is a severe deterioration of their cash position. At the end of 2010 they boasted a cash position of $2.6 billion, but at the end of 2012 they only had $930 million. JCP faces competition from a variety of retailers, being a “middle market” retailer they face competition from high-end retailers like Nordstrom, and bargain retailer’s like Kohls’.

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J. C. Penney Company, Inc. (JCP) is one of America 's largest store department of retailers. In 1902, James Cash Penney established the primary J. C. Penney store of department, initially named The Golden Rule, in the little mining town of Kemmerer in Wyoming. From that moment, J. C. Penney has gotten to be one of the biggest retailers in the discount and department of the retail business in 49 states with 1033 stores including Puerto Rico. Moreover, J. C. Penney works J. C. Penney operates “One of the largest apparel and home furnishing sites on the Internet, jcp.com, and the nation’s largest general merchandise catalog business”

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