Acct 504 Course Project

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James Cash Penney opened his first store located in Kemmerer Wyoming in 1902, at the age of 25. The first store was opened in partnership between Penney, T.M Callahan and Guy Johnson as a ‘cash only’ store, refusing to take mining script or extend credit. Investing his entire savings of $500, Penney had to borrow $1,500 and was cautioned against his ‘cash only’ policy, as other stores in mining towns had been failing. The store was a success in spite of bankers warnings earning $28,898 in sales. Within two years Penney bought out Callahan and Johnson, and Penney had taken over their three other stores. Expanding rapidly, by 1915 there were 83 stores and by 1917 there were 175. Currently there are over 1,200 with over 205,000 employees stores ranging from the all 50 states as well as Puerto Rico, Mexico and Chile, the company is currently headquartered in Plano Texas. J.C. Penney sells; clothing and shoes for men, women and children; kitchen goods and household appliances; bathroom and bedroom linens; jewlery and other accessories, they are known widely for their catalog services; and in 2010 they introduced the Sephora, a cosmetic company carrying many major brand names inside their stores.

Kohl’s management purchased 40 stores in Wisconsin and Indiana from the founding company of BATUS (British-American Tobacco Co.) in 1986 and became known as ‘one of the largest discount department store chains in the United States’ (Kohl’s Corporation History). Spending three years developing their Kohl’s concept of moderately priced apparel for middle-income families, Kohl’s began expanding from the mid-west in 1988. With over 33,000 employees Kohl’s is based out of Menomonee Falls, Wisconsin and operates 1,146 stores nationwide. Kohl’s sells jewelry, clothing accessories, cosmetics, shoes, small kitchen appliances and cookware, bedroom and bathroom linens, as well as clothing for men, women, and children. These items include nationally recognized names, and more recently lines designed for Kohl’s by well known designers such as Vera Wang.

($ in millions, except per share data)JC Penney IncKohls CorpInterpretation and comparison Earnings per shareAs given on the income statement=$1.60=$3.67Comparing these numbers is not meaningful since the number of oustanding shares differs.

Current ratio:Current assts$6,370=2.415,645=2.08J.C.Penney has $2.41 in current assets for every $1in current liabilities. Where Kohl's has only $2.08. Based on this J.C. Penney is more liquid.

Current liabilities$2,6472,710

Gross profit ratio:Gross profit (net sales- cost of goods sold)6,960=39.19%7,032=38.24%J.C.Penney's gross profit ratio is better than Kohl's almost 1% (39.19%-38.24%=0.95%)
Net sales17,75918,391

Profit margin ratio:Net income389=2.19%1,114=6.06%Kohl's is more profitable when comparing profit margin ratio. They earn 6 cents for every $1 in sales compared to the 2 cents J.C. Penney earns.

Net sales17,75918,391

Inventory Turnover:Cost of goods sold10,799=3.3611,359=3.74Kohl's inventory turnover ratio is better by 0.38 (3.74-3.36=0.38) over J.C. Penney. Possibly indicative that Kohl's volume of sales in terms of inventory is better than J.C. Penney

Average inventory3,2133,036

Days in inventory:365 days365=108.60365=97.56The results in line with the inventory turnover ratio favor Kohl's. Kohl's sells their inventory 11 days faster than J.C. Penney (108-97.56)

Inventory turnover3.363.74

Receivable turnover ratio:Net credit sales0=00=0Not applicable. No accounts recievable or credit sales listed on the annual report of either company.
Average net receivables00...
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