Comparative Analysis Of J. C. Penney's Corporation

Even though the accounts receivable ratio is often a good indicator of a company's payments collecting ability, it could be misleading. It is an average and because of that customers that carry high balances and pay quickly could skew the average, concealing a problem with the majority of accounts with small balances. ▪ Accounts receivable aging report – lists unpaid customer invoices by date ranges. The purpose of this report is to show the business owner what receivables need to be dealt with more urgently because they have been overdue longer. Companies can use an aging report to determine whether it is taking on too much risk, because past due tend to get more difficult to collect the older they become.

So basically, the lower the interest coverage ratio, the higher the company’s debt burden and the greater the possibility of bankruptcy or default. "interest coverage ratio = " "profit before interest " /"interest paid" --- Financial Ratios Analysis of BA and Ryanair Using the formula ratios as laid out on the previous chapter, following are their result of calculations: a) Liquidity BA Ryanair No. Ratio 2011 2012 2013 2011 2012 2013 1. Current 0.75 0.60 0.63 1.89 2.14 1.97 2. Acid 0.72 0.57 0.61 1.89 2.13 1.97

It is calculated every year on the opening balance of asset. Other than that, this method is acceptable for income tax purposes and have tax benefit. For most of them that put themselves in businesses will receive their tax break sooner rather than take it later. This is because their business is able to claim a larger depreciation tax deduction earlier on. For example, reducing balance method shows a new car will lost it value quickly.

"The bigger the profit and the smaller the required capital base, the more profitably the business will run. Profitability is therefore an important success measure in company valuation." (Nicolas, 2014, p41). The 2010 Paramount budget totaled $48.3 million with $20.2 million for advertising and $28.1 million for consumer and trade promotions. 87% of budget marketing would be required to launch products in mainstream positioning.

It explains the concept of hedging and its use in American Barrick in detail. The hedging program was very important deal for American Barrick because it helped them earn profits amidst falling gold prices. As for example, in 1992 market price of gold was $345 per ounce, however American Barrick was able to sell it at $422 per ounce, much higher than the prevailing market price. It says hedging is basically reducing exposure to something that can be risky to the firm or organisation.

Walmart have total assets 203 billion which is about 5 times larger than target which has $41.4 Billion but if we compare these two company together, target has higher profit margin than Walmart (Mirzayev, 2015). Walmart pursue lower – cost strategy, where as target pursue differentiation strategy. The percentage help to indicate how well companies are performing in real world. Liquidity ratio shows that Walmart and target have to pay its debt obligation. In this figure, we can see target of higher current ratio that means target have greater ability to pay its debt as compare to Walmart.

In order to identify red flags for risk management from various financial risk ratios, models, and traditional ratios for Bear Stearns and Lehman Brothers, we list our calculation results below. Based on our calculation, Bear Stearns got 15 red flags, which occupied 68% of total red flags, while Lehman Brothers 12 red flags, occupying 55% of total red flags. These two numbers were high even compared with other investment banks, and companies committed fraudulent activities. In summary, both Lehman Brothers and Bear had high possibility of going bankruptcy.

1. INTRODUCTION The following chapter will illustrate the background of the research, will introduce the topic of discussion and it relevance, will state the hypothesis and provide with some additional relevant information and with overview of the structure of the paper. 1.1. The background and hypothesis statement Analyzing existing markets, it was easy to assume that the most demanded fields are also the most profitable.

Should the upper class pay as much taxes as the lower class? Over the years, the taxes started going higher for the lower class the taxes for the upper class decreased. Taxes should be based on the ratio of how much a person makes. Rich people have a lot of money and it’s nothing to when it comes to pay taxes. Poor people have trouble getting jobs and putting food on the table.

The current ratio is a liquidity and efficiency ratio that measures a firm's ability to pay off its short-term liabilities with its current assets. In the year 2012, KHB had a current ratio of 1.688 but it comes to decrease in 2013 to a 1.642. The ratio in the year 2014 was 1.670 indicating a slight increase. The competitor of KHB, the PMMB had a current ratio of 4.785, 4.012 and 3.622 from the year 2012 to 2014 respectively. A current ratio should be more than 2.0 as a higher current ratio indicates a more promising current debt payments.

Firms with excessive liabilities may run into severe trouble, even if they are otherwise successful entities. In finance, the term leverage refers to the ration between the firm 's liabilities and equity and is calculated by dividing total liability by shareholder equity. Note that some analysts prefer to use only long-term liabilities, which are payment obligations coming due in one year or more, when calculating leverage. The more common leverage formula, however, incorporates all liabilities. If stockholder equity is less than total liability, the firm 's leverage ratio will be greater than 1.

Because Lowes has a very high inventory level, the quick ratio is pretty useless. Their current ratio is good for the industry, but behind the market. These statistics show that Lowes is in a strong financial position. As far as efficiency is concerned, Lowes productivity from net income and revenue is less than the market but higher than their industry. This shows they still have a bit of room for improvement in their productivity to match the market.

Thus, if the legislature finances their capital then the wealthy should pay a sufficient share of the governments taxes. However, when concerning the financial state of the economy Piketty advocates that, “high compensation in the U.S today has little to do with managers’ productivity and almost everything to do with the cozy relationship between managers and corporate boards.” (Boundreaux 288). This statement means that the government works closely with corporations to aide them with tax cuts. Hence, in the 1980’s when businesses competed, because the market economy was already diminishing wages and benefits declined as profits enlarged, which created inflation (Yates 10).

Operating margin/Return on sales (ROS) is the ratio of operating income divided by net sales or revenue, usually presented in percent. According to gurufocus’ statistics (October, 2015), Costco’s operating margins (3.12%) ranked higher than 53% of the 359 Companies in the Global Discount Stores industry (2.99%). Just like Gross Margin, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions.

After making several calculations on both Kohl’s and JCPenny’s finical statements it is clear that Kohl’s is in a better financial position. Starting with over an 8-point gap between Kohl’s 3.50 net profit margin, to JCPenny’s -4.06 net profit margin. This proves that Kohl’s is more profitable making 3.50 dollars of income for every item sold, on average. Kohl’s is the better company to invest in but JCPenney is slowly pulling themselves out of a financial crisis. According to Investopedia, “Kohls is opening a new outlet store it calls Off-Aisles… if this concept works, which it likely will, considering consumer conditions, look for Kohl’s to ramp it up, big time.