I am looking for assistance on questions A through E. Also I need assistance on the Times Interest Earned equation. I have attached the information needed. Please give me the form/row that you found it on so I can properly enter that into the formula.The instructor gave the following information:
Times interest earned=Earnings before Interest Expense and taxes/Interest Expense.****Use Interest expense if given.If the company does not break out interest expense you will have to use net interest.Also, please note that you should be using operating income for earnings before interest expense and taxes, since we want net of any other nonoperating income or expenses.
File Home Insert Page Layout Formulas Data Review View Help Tell me what you want to do 15 Share Comments & Cut Arial 11 - A" A = = ab Wrap Text General Normal Bad Good Neutral Calculation IX AutoSum AY O Paste [ Copy BI U - - MA. Merge & Center Conditional Format as Fill Format Painter Check Cell Table . Explanatory ... Input Linked Cell Note 41 nsert Delete Format Clear Sort & Find & Formatting Filter . Select Clipboard Font Alignment Number Styles Cells Editing B26 v fx B E G H K L M N O P 12 Months Ended in Millions $ Percentages J.C. Penney Company, Inc. Common Size Income Statement Feb. 02, 2019 Feb. 03, 2018 Jan. 28, 2017 Feb. 02, 2019 Feb. 03, 2018 N Jan. 28, 2017 Total net sales $ 11,664 $ 12,554 $ 12,571 7.05% 97.52% 7.31% 4 Credit income and other 355 319 347 2.95% 2.48% 2.69% 5 Total revenues 12,019 12,873 12,918 100.00% 100.00% 100.00% Costs and expenses/(income): Cost of goods sold (exclusive of depreciation and amortization shown separately 7 below) 7,870 8,208 8,097 65.48% 63.76% 62.68% 8 Selling, general and administrative (SG&A) 3,596 3,845 3,973 29.92% 29.87% 30.76% 9 Depreciation and amortization 556 570 609 4.63% 4.43% 4.71% 10 Real estate and other, net (19) (146 (111) 0.16% -1.13% 0.86% 11 Restructuring and management transition 22 184 26 0.18% 1.43% 0.20% 12 Total costs and expenses 12,025 12,661 12,594 100.05% 98.35% 97.49% 13 Operating income/(loss) (6) 212 324 0.05% 1.65% 2.51% Other components of net periodic pension and postretirement benefit cost/(income) (71) 98 (53) 14 -0.59% 0.76% -0.41% 15 Loss on extinguishment of debt 23 33 30 0.19% 0.26% 0.23% 16 Net interest expense 313 325 363 2.60% 2.52% 2.81% 17 Income/(loss) before income taxes 271) (244 (16) 2.25% 1.90% -0.12% 18 Income tax expense/(benefit) (16 (126) -0.13% 0.98% 0.01% 19 Net income/(loss) $ (255) $ (118) $ (17 -2.12% 0.92% 0.13% 20 21 22 a. Review the income statement vertical analyses percentage and provide at least two major changes over the three years. Are these changes a positive or negative trend? You should be focusing on specific accounts and not subtotals or totals. 24 25 b. What are the company's 2 largest major expenses for the current year? 26 27 28 c. Discuss the fluctuations in net interest expense and income taxes. What are the cause of these changes in each of the accounts? You need to be specific to what is occurring in the financial statements of each of these companies. Do not provide generic comments. 29 30 31 32 33 d. Was the company more or less profitable when compared to the prior year? What caused the change in income from the prior year? Include in your comments discussion of the gross margin percentage. 34 35 36 JCP_CommonSizeBalanceSheet KSS_CommonSizeBalanceSheet JCP_CommonSizeIncomeStatement KSS_CommonSizeIncomeStatement Ratio and Comments GradingRubric +lome Insert Formulas Data Review & Cut Arial * 11 - A" A" =1 ap Wrap Text General Normal Bad Good Neutral Calculation AutoSum IG Copy AP O Paste Format Painter BIU - - LA. BEE GEE Merge & Center $ ~ % 9 08 28 Conditional Format as Check Cell Explanatory ... Input Linked Cell Fill Note nsert Delete Format Formatting * Table Clear Sort & Find & Filter . Select Clipboard Font Alignment Number Styles Cells Editing D28 X V B D E G H K L M N O P Q 12 Months Ended in Millions $ Percentages W N Kohl's Corporation Common Size Income Statement Feb. 02, 2019 Feb. 03, 2018 Jan. 28, 2017 Feb. 02, 2019 Feb. 03, 2018 Jan. 28, 2017 Total revenue $ 20,229 $ 20,084 $ 19,68 100.00% 100.00% 100.00% 4 Cost of merchandise sold 12, 199 12,176 11,944 60.30% 60.63% 60.69% 5 Gross Margin $ 8,030 $ 7,908 $ 7,737 39.70% 39.37% 39.31% 6 Operating expenses: 7 Selling, general and administrative $ 5,601 $ 5,501 $ 5,430 27.69% 27.39% 27.59% 8 Depreciation and amortization 964 991 938 4.77% 4.93% 4.77% 9 Impairments, store closing and other costs 104 186 0.51% 0.00% 0.95% 10 Operating income 1,361 1,416 1,183 6.73% 7.05% 6.01% 11 Interest expense, net 256 299 308 1.27% 1.49% 1.56% 12 Loss on extinguishment of debt 63 0.31% 0.00% 0.00% 13 Income before income taxes 1,042 1,117 875 5.15% 5.56% 4.45% 14 Provision for income taxes 241 258 319 1.19% 1.28% 1.62% 15 Net income $ 801 $ 859 $ 556 3.96% 4.28% 2.83% 16 17 18 a. Review the income statement vertical analyses percentage and provide at least two major changes over the three years. Are these changes a positive or negative trend? You should be focusing on specific accounts and not subtotals or totals 19 20 21 b. What are the company's 2 largest major expenses for the current year? 22 23 24 C. Discuss the fluctuations in interest expense and income taxes. What are the cause of these changes? You need to be specific to what is occurring in the financial statements of each of these companies. Do not provide generic comments. 25 26 27 28 d. Was the company more or less profitable when compared to the prior year? What caused the change in income from the prior year? Include in your comments discussion of the gross margin percentage. 29 30 31 32 33 34 35 36 37 38 39 JCP_CommonSizeBalanceSheet KSS_CommonSizeBalanceSheet JCP_CommonSizeIncomeStatement KSS_CommonSizeIncomeStatement Ratio and Comments GradingRubric Ready " -- + 100%File Home Insert Page Layout Formulas Data Review View Help Format Tell me what you want to do 15 Share ~Comments LO X Cut Arial - 11 - A" A" = ab Wrap Text Number Normal Bad Good Neutral Calculation AutoSum ~ Ap Paste [B) Copy BIU - - MA. JESSEE Merge & Center + % 9 Conditional Format as Check Cell Explanatory ... Input Linked Cell Note Insert Delete Format Fill Format Painter Formatting . Table Clear Sort & Find & Filter * Select Clipboard Font Alignment Number Styles Cells Editing TextBox 1 X A B D E F G H K M year's amount)/2). Make sure you are using parenthesis, so that Excel knows to add the numerator Feb. 02, 2019 Feb. 03, 2018 Feb. 02, 2019 Feb. 03, 2018 and then divide by 2. 8 1. Current ratio 1.18 1.20 1. Current ratio 1.80 1.68 9 2. Liabilities-to-equity 5.60 5.11 2. Liabilities-to-equity 1.26 1.47 10 3. Times interest earned 3. Times interest earned 3.50 4. Return on Equity -shown as a 4. Return on Equity -shown as a 11 percentage -19.98% -9.24% percentage 14.64% 15.70% 5. Profit Margin-Shown as a 5. Profit Margin-Shown as a 12 percentage -2.12% -0.92% percentage 3.96% 4.28% 13 6. Asset Turnover 1.49 1.59 6. Asset Turnover 1.56 1.55 14 7. Financial Leverage 6.34 6.34 7. Financial Leverage 2.36 2.36 8. Redo your Return on Equity 8. Redo your Return on Equity calculation by calculating Profit calculation by calculating Profit Margin*Asset Turnover*Financial Margin*Asset Turnover*Financial 15 Leverage. -19.98% -9.24% Leverage 14.64% 15.70% 16 17 18 19 4. On the Ratio and Comments worksheet answer the following questions in the text box I have provided using the results of ratio analysis and vertical analyses to explain your answer. 20 a. Using the vertical analyses, which company is more profitable? Why? Look for major differences over time and between the companies. Which statement are you using to make your assessment on 21 profitability? 22 23 24 25 b. Explain what the following terms mean and what they are measuring: profit margin, asset turnover, and financial leverage. Include in your explanation of each of these terms, how a company can 26 make changes in operations to make these ratios more favorable 28 29 c. Explain how the Return on Equity has changed over time by discussing the changes in profit margin, asset turnover, and financial leverage. Remember the DuPont return on equity disaggregation is 30 profit margin times asset turnover time financial leverage. 31 32 33 34 d. Explain what liquidity means. Which company is more liquid? Why? In your explanation you should reference the ratio you used in determining which company is more liquid. 35 36 37 38 e. Explain what solvency means. Which company is more solvent? Why? In your explanation you should reference the ratios you used in determining which company is more solvent. 40 JCP_CommonSizeBalanceSheet KSS_CommonSizeBalanceSheet JCP_CommonSizeIncomeStatement KSS_CommonSizeIncomeStatement Ratio and Comments GradingRubric +
