Financial Statement Analysis

Running head: COMPARATIVE FINANCIAL ANALYSIS OF COMPANIES 1

COMPARATIVE FINANCIAL ANALYSIS OF COMPANIES 2

Comparative Financial Analysis of Companies

Student’s Name

Institution

Marketing and Operational Analysis of Companies

By analyzing Macy's, Sears, Kohl's and Target business in terms marketing characteristic there is various factors that arise is regarding to how they do their operation and they include, Customer focus, subordinate focus, sales growth, and profit growth. Indeed these factors have been of helps to the company to gain Courtesy and Respect regarding how consumers perceive them (Kaplan, et al. 2015).

The diversities in this firms arises in management attitudes actions, the way they interact with their members and vendors which enable them to conduct business with efficiently and more effectively. They have also been in a better position in terms attracting, hiring and retaining the best talent in the firm, recognizing, promoting and rewarding associates who deliver good results and embracing diverse people, ideas, and experiences (Simons, 2013).

The ratio in use

There are various ratios in use which include the quality of income=cash flow from operating activity/net income. Also, the other ratio is current rate among others (Kaplan, et al. 2015).

Current=current asset/current liability

Reasons the Companies Were Selected

The selection of the companies was because of the way they share common characteristics such as trying to establish new store models, pushing web sales, practicing old school marketing, going intrusively into the new school with sales pitches and discounting in old and new ways. In fact it the way they share characteristic makes it possible for the analysis to be carried out (Kaplan, et al. 2015).

Methodology

The method in use for data extraction, processes is DuPoint Analysis as it is flexible and its breakdown affecting three components of a company such as operating efficiency measured by Profit margin, asset management measured by total asset turnover, and financial leverage determined by the equity multiplier (Simons, 2013).

Mathematical representation of DuPoint Analysis calculation is

Return on Equity= Profit Margin * Asset Turnover Ratio * Equity Multiplier

Its calculation is in several ways, and the most popular one is on the table below: ROE = Net Income/Equity Net Income / Equity = (Net Income / Sales) * (Sales / Assets) * (Assets / Equity) ROE = Profit Margin * Asset Turnover Ratio * Equity Multiplier

	Compatibility
Ratio	JCP	SEARS	TARGET	KOHI’S	Macy’s	Industrial average
Debt Management
Debt ratio =	=0.86	0.94	0.84	0.59	0.55	0.50
Debt to equity =	=6.21	7.51	6.10	5.89	5.50	7.2
Profitability
profit margin= *100	*100= (0.00705%)	(0.00801%)	(0.00700 %)	(0.00659%)	(0.00560%)	46.92%
Profit margin= profit margin= *100	(0.041%)	(0.045%)	(0.039% )	(0.034%)	(0.030%)	7.96%
Liquidity
Current ratio=	=1.67	2.21	1.50	1.45	1.30	1.66
Quick ratio=	=0.53	0.8	0.4	0.3	0.2	0.53
Asset management ratios
Fixed asset turnover =	=1.96	2.00	1.87	1.79	1.60	1.00%
Total assets turnover =	=1.34	1.67	1.20	1.19	1.15	0.14%
value creation ratios
Price earnings ratio =	=(25.89)	(27.89)	(25.32)	(24.90)	23.89)	17%

Analysis

From various companies, aspects such as profitability, debt management, liquidity, asset administration and value creation, Sear’s business display to be the best business as compared to JCPenney, Target, Kohl's and Macy’s accordingly (Latif, et al. 2014). Although there is less value creation in the market from the Sear firm, one should consider the best perspective of it as shown from Comparative Financial Analysis. Long-term investors should find companies which have demonstrated earning power over a period of 10 plus years, as measured by the Return on Equity (Weygandt,e t al 2015).

Sears Company outshines JCPenney Company. From on DuPont analysis, it does that in regard to operation and management of assets and their capital structure as related to their financial profiles of the companies. However, it shows this because it demonstrates diversity in its marketing and operational characteristics as compared to JC Penney (Latif, et al. 2014).

Target Company is among the third from the financial analysis. Kohl's company has also shown outstanding performance regarding net margin, asset turnover and the asset to equity ratio. Macy’s company indicates that it is below average company under the comparative analysis. Therefore the direct competitor of the JCPenney is the Sears and Target Company (Kaplan,e t al 2015).

References

Kaplan, R. S., & Atkinson, A. A. (2015). Advanced management accounting. PHI Learning

Latif, M., Hassan, M., Latif, A., Rasheed, I., & Yousaf, U. (2014). The Financial Performance Analysis of Google Inc. V/S Industry Technology. Research Journal of Finance and Accounting, 5(17), 103-109.

Simons, R. (2013). Performance Measurement and Control Systems for Implementing Strategy Text and Cases: Pearson New International Edition. Pearson Higher Ed.

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & Managerial Accounting. John Wiley & Sons.