Kohls vs Jc Penney

You all get the chance to play the role of financial analyst below. The summary should be a comparison of each company's performance for each major category of ratios (liquidity, solvency, and profitability) listed below. Focus on major differences as you compare each company's performance. A nice way to conclude is to state which company you feel is the better investment and why.

Measuring Ability to Pay Current Liabilities: JC Penney has a slight advantage in its ability to pay current liabilities. JC Penney has $2.41 in assests for every current liability while Kohls has $2.08 in assets per current liability.

Measuring Turnover: Kohls Turns their inventory over faster than JC Penney. Kohls is turning their inventory over 4.4 times as opposed to 3.5 times for JC Penney. Kohls only holds its inventory for 82 days a year while JC Penney holds it inventory about 105 days a year which is about a month longer than Kohls.

Measuring Leverage- Overall Ability to Pay Debts: Kohls carries a lot less debt than JC Penney. Kohls only carries 40.3% debt while Jc Penney carries 58.1%. Kohls can cover their interest expense 13.6 times with income before taxes and interest. Whereas JC Penney can only cover 3.6 times their interest expenses before taxes and interest about 4 times less than Kohls.

Measuring Profitability: Kohls has an overall advantage in the profitability ratios. Kohls has close to twice the advantage in return of common stockholders equity. Kohls return is 14% whereas JC Penney is only 7.6%. JC Penney has a slight advantage in gross profit margin 39.2% versus 38.2% for Kohls. However, Kohls has the advantage in rate of return 6.1% to 5.6% for JC Penney.

Analyzing Stock as an Investment: Kohls has a dividend yield of 2% while JC Penney does not currently issue out Dividends. Even with a dividends to shareholders Kohls has close to 10 times the amount of cash as JC Penney 915mm vs 93mm that creates a significant advantage for Kohls to pay...