Course: Financial Accountingn504 Project

Topics: Generally Accepted Accounting Principles, Financial ratios, Balance sheet Pages: 4 (904 words) Published: May 21, 2013
Use this Excel spreadsheet to compute ratios; show your computations for all ratios on this tab and also include your commentary. The financial statements used to calculate these ratios are available in Appendix A and Appendix B of your textbook.

Kohl’s J.C. PenneyInterpretation and Comparison between the two companies' ratios (Reading the Appendix of Chapter 13 will help you prepare the commentary)

Earnings per shareAs given in the income statement$3.67Basic Common$1.60
Earning per share express net income earned on a per share basis which provides a useful information for shareholders to determin profitability .Kohl's earning per share is lot higher than JC Penne.

Current ratioCurrent assets$5,645=2.08$6,370=2.41
Current liabilities$2,710$2,647The current ratio is used to measure and determine the company’s short-term debt-paying ability. JC Penne has a higher ratio than Kohl's.

Gross Profit RatioGross profit $7,032=38.2%$6,960=39.2%
Net Sales$18,391$17,759Gross profit ratio measures the margin by which selling price exceeds cost of goods sold. JC Pennee has a slightly higher ration than Kohl's.

Profit margin ratioNet Income$1,114=6.1%$389=2.2%
Net Sales$18,391$17,759profit margin ratio is a measure of the percentage of each dollar of sales that results in net income. Kohl's ratio is three time higher than JC Penne.

Inventory TurnoverCost of Goods Sold$11,3593.8$10,7993.5
Average Inventory$2,980times$3,119timesInventory turn over ratio measures the number of times average inventory was sold during the period. Kohl's inventory ratio is slightly higher than JC Penne's.

Days in Inventory365 days365=96365=105
Inventory turnover3.8days3.5daysIt measures the average number of days inventory is held. JC Penne hold their...
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