Kohls Corporation is a national retail department store. The companys total revenues for the twelve months ended

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Kohl’s Corporation is a national retail department store. The company’s total revenues for the twelve months ended October 31, 2016, were $19 billion. Macy’s is a larger department store company with $26.1 billion of revenues for the same period. The following ratios for the two companies were obtained for this period from csimarket.com:

Ratio Kohl's Macy's Gross profit percentage Net profit margin 35.9% 39.1% 1.7% 2.6% Return on equity 5.9% 16.8% $3.27 $2


Required:

1. Which company appears more profitable? Describe the ratio(s) that you used to reach this decision. 

2. Which company appears more liquid? Describe the ratio(s) that you used to reach this decision.

3. Which company appears more solvent? Describe the ratio(s) that you used to reach this decision.

4. Are the conclusions from your analyses in requirements 1–3 consistent with the value of the two companies, as suggested by their P/E ratios? If not, offer one explanation for any apparent inconsistency.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Fundamentals of Financial Accounting

ISBN: 978-1259864230

6th edition

Authors: Fred Phillips, Robert Libby, Patricia Libby

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