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and J.C. Penney Corporation

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J.C. Penney was founded by James Cash Penney in 1902. This Plano, Texas

based company currently provides clothing, home goods, appliances, shoes,and some of them even have beauty shops located inside of them. J.C Penny

has 1,100 department stores as of December 7, 2011 in the United States and

Puerto Rico. They currently provide sales through the store, online and

catalogs. This more than a century old company also provides styling salon,

optical, portrait photography and custom decorating services. They also

employs 159,000 employees.

Kohl's Corporation currently handles 1,127 department stores in 49 states.

Kohl's headquarters is located in Wisconsin and does its business online and

store front base. Kohl's sells name brand clothing, jewelry, home goods and

other essentials. The company was founded by Max Kohl in 1962 inBrookfield, WI. Today, They employ more then 30,000 employees.

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Earnings per share As given in the income statement $3.67

Current ratio Current assets $5,645,000,000 = 2.08 $6,370,0Current liabilities $2,710,000,000 $2,647,0

Gross Profit Ratio Gross profit $7,032,000,000 = 38.24% $6,960,0

Net Sales $18,391,000,000 $17,759

Kohl's Corporation J.C

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Profit margin ratio Net Income $1,114,000,000 = 6.06% $389,0

Net Sales $18,391,000,000 $17,759

Inventory Turnover Cost of Goods Sold $11,359,000,000 3.8 $10,799

Average Inventory $2,979,500,000 times $3,118,

Days in Inventory 365 days 365 = 96 36

Inventory turnover 3.8 days 3

Receivable Turnover Ratio Net credit sales = Not Applicable

Average Net Receivables

Average Collection Period 365 = Not Applicable

Receivable Turnover Ratio

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Assets Turnover Ratio Net Sales $18,391,000,000 = 1.38 $17,759

Average Total Assets $13,362,000,000 $12,811

Return on Assets Ratio Net Income $1,114,000,000 = 8% $389,0

Average Total Assets $13,362,000,000 $12,811

Debt to Total Assets Ratio Total Liabilities $5,462,000,000 = 40.27% $7,582,0

Total Assets $13,564,000,000 $13,042

Times Interest Earned Ratio Net Income + Int Expense + Tax Expense $1,914,000,000 = 13.6 832,00

Interest Expense $141,000,000 231,00

Payout ratio Cash dividend declared on common stock = Not Applicable $189,0

Net income $389,0

Return on Common Stockholders' Equity Net income - Preferred stock dividend 1,114,000,000 = 14% $389,0

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Average common stockholders' equity 7,977,500,000.00 $5,119,

Free cash flow = ($96,00

Free cash flow

Free cash flow per kohl's includes tax benefitfrom pension contribution, discretionaty cashpension contribution and proceeds from sale

of assets on page 15 of the 10K report $915,000,000 = $915,000,000 $158,0

Current cash debt coverage ratio Cash provided by operations $1,676,000,000 = 0.66 $592,00

Average current liabilities $2,550,000,000 $2,948,0

Cash debt coverage ratio Cash provided by operations $1,676,000,000 = 0.31 $592,00

Average total liabilities $5,384,500,000 $7,692,5

Price/Earnings ratio Market price as of 1/31/2011 $50.78 = 13.84 $32

EPS $3.67 $1.

Cash provided by operations minus capitalexpenditures minus cash dividends paid

$915,000,000 $915,000,000

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Interpretation and Comparison between the two

companies' ratios (Reading the Appendix of

Chapter 13 will help you)

$1.64

Comparing these numbers is not meaningful sincethe number of shares outstanding differs.

2.41

JC Penney has $2.41 in current assets for every $1dollar in current liabilities while Kohl's has only $2.08.JC Penney is more liquid based on the current ratio.

39.19%

JC Penney's gross profit ratio is better than Kohl'sgross profit ratio by almost 1% (39.19% - 38.24%)

0.95

rporation

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1.39

The result of this particular ratio is almost identical;JC Penney is i rrelevantly better than Kohl's.

3%

Kohl's efficiency in the usage of its resources isreflected on the return on assets ratio as it earns 8cents for every dollar of assets as compared to JCPenney's 3 cents earning for every dollar of assets.Therefore, Kohl's is more profitable based on thisratio.

58.14%

Kohl's require to liquidate 40.27% of its assets attheir book value to satisfy their obligations while JCPenney must liquidate 58.14% of its assets at theirbook value to satisfy their obligations. This ratio tellsus that the stockholder's interest is larger at Kohl'scompared to JC Penney.

3.6

Kohl's ability to pay its obligation is in a betterposition compared to JC Penney based on this ratio.Kohl's times-interest earned ratio is significantlyhigher than JC Penney.

48.59%Not Applicable - Kohl's did not declare and paydividend on 2010.

8%

Kolh's earning for every dollar invested by commonstockholders is better by 6 cents as compared to JCPenney so Kohl's is more profitable based on thisratio.

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($96,000,000)

Kohl's has $915M in free cash flow while JC Penneyhas -$96M based on the provided solution but $158Mif based on the computation provided by the annualreport. Regardless, Kohl's has the advantage on thisparticular ratio.

$158,000,000

0.20

Kohl's 66 cents in cash provided by operation inrelation to average current liabilities is better than JCPenney's 20 cents so Kohl's is more liquid based onthis liquidity ratio.

0.08

Kolh's 31 cents in cash provided by operatingactivities for every dollar in average total liabilities isstronger that JC Penney's 8 cents for every dollar ofaverage total liabilities. Therefore, Kohl's is moresolvent as compared to JC Penney based on thisratio.

22.27JC Penney is more marketable and the public ismore optimistic based on the price earnings ratio.

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Liquidity: Kohl's state of liquidity is better than JC Penney based on the results of the liquidity ratios like

current cash debt coverage ratio and free cash flow. 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. The result of current cash debt coverage ratio is also significantly in favor of Kohl's

compared to JC Penney. However, JC Penney's current assets in relation to current liabilities is more by

33 cents as com ared to 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. These two ratios project a significant margin in favor of Kohl's; 40.27% vs 58.14% 13.6 vs

3.6 for debt to the total assets ratio and the times interest earned ratio respectively. 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. Therefore, Kohl's state of

Profitability: The profit margin ratio, return on assets and return on common stockholder's equity are all in

favor of Kohl's. Kohl's profit margin ratio of 6.06% is significantly higher than JC Penney's 2.19% and the

difference of 5 cents in the return on assets ratio by Kohl's over JC Penney is also significant. Kohl's

earnings for every dollar invested by common stockholders is better by 6 cents as compared to JC

Penney. Overall, Kohl's is more profitable than 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

'

Conclusion: Kohl's is more liquid and solvent compared to JC Penney based on the analysis and I can also

safely say that Kohl's profitability is stronger than JC Penney because majority of the profitability ratios

are in favor of Kohl's. The price earnings ratio might say 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. Overall, the financial standing of Kohl's is better than JC

Penne based on m evaluation of these two com anies.

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The Appendixes of your textbook and any information you use to profile the companies should be cited as a

http://finance.yahoo.com/q/pr?s=JCP+Profile

http://www.jcpenney.com

http://finance.yahoo.com/q/pr?s=KSS+Profile

http://www.kohlscorporation.com/PressRoom/PressRoom02C.htm

http://bigcharts.marketwatch.com/historical/default.asp?symb=kss&closeDate=01%2F31%2F2011&x=27&y=18

http://bigcharts.marketwatch.com/historical/default.asp?symb=jcp&closeDate=1%2F31%2F11&x=37&y=19

http://www.jcpenney.com/http://www.jcpenney.com/

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reference below.

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