Your Course Project Financial Statement Analysis Project -- A Comparative Analysis of Kohl?s Corporation and J.C. Penney Corporation Below is the link for the financial statements for Kohl?s Corporation for the 2010 fiscal year ending January 29, 2011. Under the term Groupings Filter, change the term All Forms to Annual Filings using the drop-down arrow and press Search. You should then scroll down and select the 10k dated 3/18/2011 and choose to download in Word or PDF format. http://www.kohlscorporation.com/InvestorRelations/sec-filings.htm Below is the link for the financial statements for J.C. Penney Corporation for the 2010 fiscal year ending January 29, 2011. Under the term Groupings Filter, change the term All Forms to Annual Filings using the drop-down arrow and press Search. You should then scroll down and select the 10k dated 3/29/2011 and choose to download in Word format. http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-sec A sample project template is available for download in Doc Sharing. The sample project compares the ratio performance of Tootsie Roll and Hershey using the 2012 financial statements of Tootsie Roll and Hershey provided at their websites. Description This course contains a Course Project where you will be required to submit one draft of the project at the end of Week 5 and the final completed project at the end of Week 7. Using the financial statements for Kohl?s Corporation and J.C. Penney Corporation, respectively, you will calculate and compare the financial ratios listed further down this document for the fiscal year ending 2010 and prepare your comments about two companies? performance based on your ratio calculations. The entire project will be graded by the instructor at the end of the final submission in Week 7 and one grade will be assigned for the entire project. Overall Requirements For the Final Submission: Your final Excel workbook submission should contain the following. You cannot use any other software but Excel to complete this project. 1. A completed worksheet title page tab, which is really a cover sheet with your name, the course, the date, your instructor?s name, and the title for the project. 2. A completed worksheet profiles tab, which contains a-one paragraph description regarding each company with information about their history, what products they sell, where they are located, etc. 3. All 16 ratios for each company with the supporting calculations and commentary on your worksheet ratio tab. Supporting calculations must be shown either as a formula or as text typed into a different cell. The ratios are listed further down this document. Your comments for each ratio should include more than just a definition of the ratio. You should focus on interpreting each ratio number for each company and support your comments with the numbers found in the ratios. 4. The Summary and Conclusions worksheet tab, which is an overall comparison of how each company compares in terms of the major category of ratios described in Chapter 13 of your textbook. A nice way to conclude is to state which company you think is the better investment and why. 5. The Bibliography worksheet tab must contain at least your textbook as a reference. Any other information you use to profile the companies should also be cited as a reference. Required Ratios for Final Project Submission 1. Earnings per Share of Common Stock 2. Current Ratio 3. Gross Profit Margin 4. Rate of Return on Sales (Net Profit Margin) 5. Inventory Turnover 6. Days? inventory outstanding (DIO) 7. Accounts Receivable Turnover 8. Days? sales outstanding (DSO) 9. Asset turnover 10. Rate of Return on Total Assets (ROA) 11. Debt Ratio 12. Times Interest Earned Ratio 13. Dividend Yield [For the purposes of this ratio, use Yahoo Finance to look up current dividend yield and stock price; just note the date that you looked up this information] 14. Rate of Return on Common Stockholders? Equity (ROE) 15. Free cash flow 16. Price/Earnings Ratio (Multiple) [For the purpose of this ratio, for both Kohl?s and J.C. Penney, use the market price per share on January 31, 2011] The Excel files uploaded in the Dropboxes should not include any unnecessary numbers or information (such as previous years' ratios, ratios that were not specifically asked for in the project, etc.). Please upload your final submission to the Week 7 Dropbox by Sunday at the end of Week 7. For the Draft: Create an Excel spreadsheet or use the project template to show your computations for the first 10 ratios listed above. The more you can complete regarding the other requirements, the closer you will be to completion when Week 7 arrives. Supporting calculations must be shown either as a formula or as text typed into a different cell. If you plan on creating your own spreadsheet, please follow the format provided in the Tootsie Roll and Hershey template file. Please upload your draft submission to the Week 5 Dropbox by Sunday at the end of Week 5. Other Helpful information: If you feel uncomfortable with Excel, you can find many helpful references on Excel by performing a Google search. Chapter 13 contains ratio calculations and comparison comments related to Apple and Dell so you will likely find this information helpful. BigCharts.com provides historical stock quotes. Either APA or MLA style can be used to complete the references on your Bibliography tab. There is a tutorial for APA and MLA style within the Syllabus. Grade Information The entire project will be graded by the instructor at the end of the final submission in Week 7, and one grade will be assigned for the entire project. The project will count for 18% of your overall course grade. Category Points % Description Documentation and Formatting 9 5% The report will be submitted in the form of an Excel Workbook, with each page (worksheet) of the workbook named appropriately. Please do not use any other software (such as MS Works or Lotus) to complete the project. A quality report will include a title worksheet tab, a worksheet tab for the profile of the two companies, a worksheet tab for the ratio calculations and comments, a worksheet tab for the summary and conclusion, proper citations if applicable, and a Bibliography worksheet tab for the references. Organization and Cohesiveness 9 5% A quality report will include the content described above in the documentation and formatting section. The ratios should be listed in the same order in which they appear in the project information above. Editing 18 10% A quality report will be free of any spelling, punctuation, or grammatical errors. Sentences and paragraphs will be clear, concise, and factually correct. Ratios will be expressed as numbers or percentages, depending on what is appropriate, as is shown in the textbook. Note that not all ratios are shown as percentages. Two decimal places is sufficient for each of the ratios. Content 144 80% A quality report will have correct ratio calculations and accurate supporting commentary. Any assumptions, if made, should be spelled out clearly. Supporting calculations must be shown either as a formula or as text typed into a different cell. Total 180 100% A quality report will meet or exceed all of the above requirements.

Warren Mckamey Act Fin: Managerial Use, Anlys 10244 9/25/2014 Professor: Ganesh Pandit Course Project Complete one paragraph profiling each company's business including information, such as a brief history, where they are located, number of employees, the products they sell, etc. Please reference any websites you used for the Profiles on the Bibliography tab. Tootsie Roll Industries began in a small candy store in New York in 1896. Tootsie Roll is now headquartered in Chicago with operations throughout North America and with distribution channels in over 75 countries. According to Yahoo Finance, Tootsie Roll has 2,200 full-time employees. Tootsie Roll sells the following branded candy: Tootsie Roll, Tootsie Roll Pop, Charms Blow Pop, Mason Dots, Andes, Sugar Daddy, Charleston Chew, Double Bubble, Razzles, Caramel Apple Pop, and Junior Mints. Tootsie Roll had 2012 net product sales of $549.9 million. Hershey Company was founded by Milton S. Hershey in 1893 and is headquartered in Hershey, Pennsylvania. According to Yahoo Finance, Hershey had 12,100 full-time employees. Hershey is famous for the Hershey Bar, Hershey's Kisses, Hershey's Bliss, Reese's, Twizzlers, Almond Joy, Kit Kat, and Ice Breakers. Hershey had net product sales of $6.6 billion for 2012. Use this Excel spreadsheet to compute ratios; show your computations for all ratios on this tab and also include your commentary. The financial statements used to calculate these ratios are available in Appendix A and Appendix B of your textbook. Tootsie Roll Interpretation and comparison between the two companies' ratios (reading the Appendix of Chapter 13 will help you prepare the commentary). Hershey's The comparison of the ratios is an important part of the project. A good approach is to briefly explain what the ratio tells us. Indicate whether a higher or lower ratio is better. Then compare the two companies on this basis. Remembereach ratio below requires a comparison. Earnings per Share of Common Stock (basic - common) Current Ratio As given in the income statement $0.89 $3.01 Current assets Current liabilities $197,241 $60,765 = 3.25 $2,113,485 $1,471,110 = 1.44 Gross Profit Margin Gross profit Net Sales $183,321 $549,870 = 33.3% $2,859,882 $6,644,252 = 43.0% Rate of Return (Net Profit Margin) on Sales Net Income Net Sales $52,004 $549,870 = 9.5% $660,931 $6,644,252 = 9.9% Inventory Turnover Cost of Goods Sold Average Inventory $365,573 $67,072 5.5 times $3,784,370 $641,108 Days' inventory outstanding (DIO) 365 days Inventory turnover 365 5.5 = 67 days 365 5.9 = 62 days Accounts Receivable Turnover Net credit sales Average Net Accounts Receivable $549,870 $42,002 = 13.1 $6,644,252 $430,441 = 15.4 Days' sales outstanding (DSO) 365 Receivable Turnover Ratio 365 13.1 27.9 days 365 15.4 = 23.6 days Net Sales Average Total Assets $549,870 $852,297 = 0.65 $6,644,252 $4,580,967 = 1.45 Rate of return on sales times Asset Turnover $52,004 $852,297 = 6.1% $660,931 $4,580,967 = 14.4% Total Liabilities Total Assets $196,922 $846,737 = 23.3% $3,706,466 $4,412,199 = 84.0% Net Income + Int Expense + Tax Expense Interest Expense $74,301 $137 = 542.3 1,111,148 95,569 = 11.6 Dividend per share of common stock (Yahoo Finance 11/1/2013) Market price per share of common stock (Yahoo Finance 11/1/2013) $0.32 $31.72 = 1.0% $1.94 $98.85 = 2.0% Net income - Preferred dividends Average common stockholders' equity $52,431 $657,875 8.0% $660,931 $964,658 = 68.5% Asset turnover Rate of Return on Total Assets (ROA) Debt Ratio Times-Interest-Earned Ratio Dividend Yield Rate of Return on Common Stockholders' Equity (ROE) Free cash flow Price/Earnings Ratio (Multiple) (please see the instructions for the dates to use for this ratio) Net cash provided by operating activities minus cash payments earmarked for investments in plant assets 12/31/2012 EPS as of 12/31/2012 $93,033 $25.92 $0.89 = = = = $93,033 29 5.9 times $836,100 $836,100 = $72.22 $3.01 = 24 You all get the chance to play the role of financial analyst below. The summary should be a comparison of each company's performance for each major category of ratios (liquidity, solvency, and profitability) listed below. Focus on major differences as you compare each company's performance. A nice way to conclude is to state which company you feel is the better investment and why. Measuring Ability to Pay Current Liabilities: Tootsie Roll has the advantage for the current ratio. Tootsie Roll has $3.25 in current assets for every dollar in current liabilities while Hershey has only $1.44 in current assets for every dollar in current liabilities. Measuring Turnover: Hershey has the advantage for the inventory turnover and accounts receivable turnover ratios. Hershey turns over their inventory 5.9 times to Tootsie Roll's 5.5 times and Hershey turns over their accounts receivable 15.4 times to Tootsie Roll's 13.1 times. Measuring Leverage- Overall Ability to Pay Debts: Tootsie Roll has significantly less debt than Hershey as evidenced by Tootsie Roll's 23% debt to asset ratio as compared to Hershey's 84% debt to asset ratio. Tootsie Roll can cover their interest expense 504 times with income before interest and taxes while Hershey can only cover their interest expense 11 times with their income before interest and taxes. Tootsie Roll has the advantage for each of these ratios. Measuring Profitability: Hershey has the advantage for each of the profitability ratios. Hershey has a significant edge in return on common stockholders' equity with a 68.5% return on common stockholders' equity as compared to Tootsie Roll's 8.0% return on common stockholders' equity. Hershey also has a higher gross profit rate (43.0% to 33.3%) and higher profit margin ratio (9.9% to 9.5%). Analyzing Stock as an Investment: Hershey returns a 2% dividend yield to their investors while Tootsie Roll's yield is 1%. Hershey has positive free cash flow of $836.1 million while Tootsie Roll has positive free cash flow of $93 million. Free cash flow can be used to undertake acquisitions, pay additional dividends, pay down debt, or buy back stock. Conclusion: Tootsie Roll is the safer investment when you examine their ability to pay current liabilities and overall liabilities; however, Hershey has the edge for all of the profitability ratios. For the conservative investor, Tootsie Roll looks like the way to go because of their strong current and times-interest-earned ratios. For the growth-oriented investor, Hershey is the way to go because of their stronger profitability ratios and large amount of free cash flow. The Appendices of your textbook and any information you use to profile the companies should be cited as a reference below. Big Charts for Hershey (2013). Retrieved October 29, 2013 from http://bigcharts.marketwatch.com/historical/default.asp? symb=HSY&closeDate=12%2F31%2F2012&x=0&y=0 Big Charts for Tootsie Roll (2013). Retrieved October 29, 2013 from http://bigcharts.marketwatch.com/historical/default.asp? symb=TR&closeDate=12%2F31%2F12&x=12&y=19 Harrison, W.T., Horngrenm C.T. & Thomas, C.W. (2013). Financial Accounting, 9th ed. Upper Saddle River, NJ: Pearson Education, In Hershey's 2012 Annual Report (2013). Retrieved October 29, 2013 from http://www.thehersheycompany.com/assets/pdfs/hersheycompany/TheHersheyCompany_10K_20130222.pdf HSY Profile (2013). Retrieved October 31, 2013 from http://finance.yahoo.com/q/pr?s=HSY+Profile HSY Stock Price (2013). Retrieved November 1, 2013 from http://finance.yahoo.com/q?s=hsy&ql=1 Tootsie Roll Industries 2012 Annual Report (2013). Retrieved October 29, 2013 from http://www.tootsie.com/financial/fin_247.pdf TR Profile (2013). Retrieved October 31, 2013 from http://finance.yahoo.com/q/pr?s=TR+Profile TR Stock Price (2013). Retrieved November 1, 2013 from http://finance.yahoo.com/q?s=TR&ql=1