write and write up comparing and contrasting the financial analysis of the companies JCPenney and Kohls. I will post the statements below. Please include: Sales growth in terms of percentage of increase and the numbers of stores. If you are reading the annual report, are either of the two companies adding product lines? Look at profitability treads for gross profit, operating profit, and net income. How is the profitability changing between the two companies? Since these are large retail stores, what is the trend in inventory growth? Are the growing the inventory are can the accommodate the sales increases with about the current amount of inventory on hand? Please compare their inventory efficiency with the inventory turnover ratios for each company. How are the companies handling their long-term debt? What have been the debt to equity ratios in the last five years? Can you tell what has been acquired with the additional debt, if there is any? Lastly, let's see what the stock market thinks of each company's performance. In what range has their share price been trading in the last five years? How has the Price to Earnings (P/E) ratio been during that time? What has taken place with each of these companies since the Annual Statement date? Search for new releases and other business articles and publications about each company. Please follow this format: Sales Growth-Are Net Sales Growing? Are there any divisions or product lines growing? Does the annual report indicate the reason(s) for this? Does your directional analysis (horizontal or vertical) bear this out? Can we see the sales increase in the inventory turnover ratio? Cost Control - are expenses in line with the change in net sales? Look at the costs, including the cost of goods sold, marketing expenses, and administrative expenses. Look at the COGS% change and the SGA % (selling, general & administrative expenses) changes. Again, support your observation with your directional analysis and/or ratios, Profitability - Look at the three levels of profits: gross margin, operating profit, and net income. How are they changing from year to year as a percentage of sales (vertical analysis)? Cash Flow and Liquidity - Is cash increasing or decreasing. Does that make sense in light of the profits? What about the liquidity ratios? Did you find a change in the current or the quick ratio? Look at the cash flow statements. Are operations generating or consuming cash? Is the growth of inventory reasonable as compared to the growth in cost of goods sold? Look at the accounts payable turnover ratio. And don't forget about accounts receivable and their change. Are you concerned with changes in the accounts receivable turnover ratio? Debt Levels - Is debt increasing or decreasing? Looks at the change in current and long-term liabilities in your directional analyses. What are the reasons for this change? Look at your debt ratios. Is there anything in the annual report or outside articles to explain a significant change in debt, if you find one? Equity and Stock Market Factors - Has common stock plus the paid-in capital on common stock increased? Has it decreased from a buyback of common stock (treasury stock)? What about the price of the stock, has it changed significantly over the years of your analysis. Look at the price to earnings ratio and the dividend yield ratio. JCPenney in AP P in THE in 430 9 M THE Sell G&A Exp Horicostal Analysis Statement 2014 2014 SSMAN 13391 12625 21 43% 394 4 A " AN 27.4% 36.9% Kohl's Horizontal Analysis - Income Statement (In millions, except per share data) 2014 2015 % Change 2016 % Change Net Revenues Cost of Goods Sold 19,023 19,204 1.0% 18,686 -2.7% 12,098 12,265 1.4% 11,944 -2.6% -Gross Profit 6,925 6,939 0.2% 6,742 -2.8% Sell, Gen & Admin Exp 4,350 4,452 2.3% 4,435 -0.4% Operating Income/(loss) 1,689 1,553 -8.1% 1,183 -23.8% Interest Expense 340 327 -3.8% 308 -5.8% -Income before taxes 1,349 1,057 -21.6% 875 -17.2% Income Taxes 482 384 -20.3% 319 -16.9% =Net Income 867 673 -22.4% 556 -17.4% Kohl's Horizontal Analysis - Balance Sheet (In millions, except per share data) 2015 2016 % Change Assets Current assets: Cash and cash equivalents Merchandise inventory Other 707 1,074 51.9% 4,038 3,795 -6.0% 331 378 14.2% Total current assets 5,076 5,247 3.4% Property and equipment 8,308 8,103 -2.5% Other assets 222 224 0.9% Total Assets 13,606 13,574 -0.2% Liabilties and Stockholders' Equity Current liabilities: Accounts Payable 1,251 1,507 20.5% Accrued liabilities 1,206 1,224 1.5% Income taxes payable 130 112 -13.8% Current portion of capital lease 127 131 3.1% Total current liabilities 2,714 2,974 9.6% Long-term debt 2,792 2,795 0.1% Capital lease and financing obligations 1,789 1,685 -5.8% Deferred Taxes 257 272 5.8% Other liabilities 563 671 19.2% Shareholders' Equity Common stock - 371 and 370 million shares issued 4 4 0.0% Paid-in capital 2,944 3,003 2.0% Treasury stock, at cost, 197 and 184 million shares -9,769 -10,338 5.8% Accumulated other comprehensive loss -17 -14 -17.6% Retained earnings 12,329 12,522 1.6% Total Shareholders' Equity Total Liabilties and Shareholders' Equity 5,491 5,177 -5.7% 13,606 13,574 -0.2% Kohl's Ratio Analysis 2015 2016 Liquidity Ratios Current Ratio 5.01 4.56 Quick Ratio 3.53 3.29 Cash Flow Liquidity Ratio 0.26 0.36 Activity Ratios Acct Receivable Turnover 27.16 17.40 Days Sales Outstanding 0 0 Inventory Turnover 3.04 3.15 Acct Payable Turnover 4.52 4.02 Days Payable Outstanding 0 0 Leverage Ratios Debt Ratio 20% 22% Debt to Equity 0.49 0.57 Times Interest Earned 4.7 3.8. Profitablity Ratios Gross Profit Margin 36% 36% Operating Profit Margin 8% 6% Net Profit Margin 18% 20% Cash Flow Margin 8% 6% Return on Total Assets 5% 4% Return on Equity 12% 11% Market Ratios Earning per Share 4.24 3.46 Price to Earnings Ratio 3.82 3.27 Dividend Yield 0.52 0.64 JCPenney Horizontal Analysis - Income Statement (In millions, except per share data) 2014 2015 % Change 2016 % Change Net Revenues Cost of Goods Sold 12,257 12,625 3.0% 12,547 -0.6% 7,996 8,074 1.0% 8,071 -0.0% =Gross Profit 4,261 4,551 6.8% 4,476 -1.6% Sell, Gen & Admin Exp 3,993 3,775 -5.5% 3,538 -6.3% =Operating Income/(loss) -254 -89 -65.0% 395 -543.8% Interest Expense 406 405 -0.2% 363 -10.4% =Income before taxes -694 -504 -27.4% 2 -100.4% Income Taxes 23 -60.9% -88.9% =Net Income -717 -513 -28.5% 1 -100.2% JCPenney Horizontal Analysis - Balance Sheet (In millions, except per share data) 2015 2016 % Change Assets Current assets: Cash in banks and in transit Cash short-term investments Cash and cash equivalents 119 125 5.0% 781 762 -2.4% 900 887 -1.4% Merchandise inventory 2,721 2,854 4.9% Deferred Taxes 231 196 -15.2% Prepaid expenses and other 166 160 -3.6% Total current assets 4,018 4,097 2.0% Property and equipment 4,816 4,599 -4.5% Other assets 608 618 1.6% 9,442 9,314 -1.4% Total Assets Liabilties and Stockholders' Equity Current liabilities: Marchandise accounts payable 925 977 5.6% Other accounts payable and accrued expenses 1,360 1,164 -14.4% Current portion of capital leases 26 15 -42.3% Current maturities of long-term debt 101 263 160.4% Total current liabilities 2,412 2,419 0.3% Long-term capital leases 10 219 2090.0% Long-term debt Deferred Taxes Other liabilities Total Liabilties 4,668 4,339 -7.0% 425 400 -5.9% 618 583 -5.7% 8,133 7,960 -2.1% Stockholders' Equity Common stock 153 154 0.7% Additional paid-in capital 4,654 4,679 0.5% Reinvested earnings -3,007 -3,006 -0.0% Accumulated other comprehensive income -491 -473 -3.7% Total Stockholders' Equity 1,309 1,354 3.4% Total Liabilties and Stockholders' Equity 9,442 9,314 -1.4% JCPenney Ratio Analysis 2015 2016 Liquidity Ratios Current Ratio 1.16 1.17 Quick Ratio -0.35 0.79 Cash Flow Liquidity Ratio 0.11 0.11 Activity Ratios Acct Receivable Turnover 14.03 14.15 Days Sales Outstanding 26 26 Inventory Turnover 4.64 2.83 Acct Payable Turnover 3.35 3.34 Days Payable Outstanding 70 70 Leverage Ratios Debt Ratio 86% 85% Debt to Equity 6.21 5.88 Times Interest Earned 11.5 11.2 Profitablity Ratios Gross Profit Margin 36% 36% Operating Profit Margin 1% 3% Net Profit Margin 4% 0% Cash Flow Margin 1% 3% Return on Total Assets 5% 0% Return on Equity 39% 0% Market Ratios Earning per Share 0 0 Price to Earnings Ratio 0 0 Dividend Yield 0 0