JCPenney

FNBK 3000

JCPenney

Input Data Table

Income Statement

Year 5
Year 4
Year 3
Sales

$18,424 $17,786 $17,633
Net income (loss)

$524 $(928) $405
Gross interest expense

$279 $271 $245
Preferred Dividend

$12 $25 $27
Tax rate

35%
35%
35%
Balance Sheet

Total Assets

$14,127 $18,300 $17,787
Total Debt

$9,271 $12,875 $11,417
Preffered Stock

$- $304 $333
Total Common

$- $-

Shareholders' Equity

$4,856 $5,121 $6,037

a) Disaggregation of ROA

Year 5
Year 4
Year 3

Profit margin for ROA

3.83%
-4.23%
3.20%

Total Asset Turnover

113.63%
98.57%
98.41%

ROA
4.35%
-4.17%
3.15%

b) Disaggregation of ROCE (%)

Profit Margin for ROCE

2.78%
-5.36%
2.14%

Total Asset Turnover

113.63%
98.57%
98.41%

Capital Structure Leverage

325.02%
323.42%
303.61%

ROCE
10.26%
-17.08%
6.41%

c) Reasons for change in ROCE over the three years:

The reasons for a change in ROCE are (1) an increase in interest expense, (2) an increase in debt,

(3) a decrease in total assets, (4) a change from a net loss to net income,

(5 )an increase in sales, and (6) the issuing of preferred stock.

d) Compute the ratio of ROCE to ROA for each year

Year 5
Year 4
Year 3

235.92%
409.95%
203.39%

e) Calculate net income to common stockholders from financial leverage

Creditors' Capital

ROA

4.35%
-4.17%
3.15%

After-Tax Cost of Debt

$0.0164
$0.0145
$0.0136

Excess Return to Creditors

$300.37
-$682.26
$208.19

Preferred Shareholders'

Cost of Preferred Stock

$0.0789
$0.0785
$0.0776

Excess Return to Preferred

-$5.39
-$38.27
-$16.04

Common Shareholders'

Excess Return to Common

$217.02
-$232.47
$185.85

ROCE ($)

$512.00
-$953.00
$378.00

ROCE (%)

10.26%
-17.08%
6.41%

f) Did