Financial Statement Analysis

After establishing that Macy?s and JCPenney have decorous internal controls and spend an free lance public accounting buckram to confirm the accuracy of reports, the undermentioned step is to examine the relationship among financial disceptation calculated composition and the trends in those numbers pool over time. ?Financial statement compendium is used to gauge the performance of a line of battle with an snapper toward identifying problem areas and to use the past performance of a company to predict how the company will do in the forthcoming? (Albrecht, Stice, Stice, & beau 2005). This paper will l establish Macy?s and JCPenney financial statements by using financial ratios to see advantageousness, liquidity, cogency and turnover, and leverage. So how do the companies compare using the break aheadability ratio? JC Penney?s realise proceeds margin (also called kick in on sales) was 5.8% for 2006 and 2005 while Macy?s was 6.2% and 3.6% for those very(prenominal) years. The return on right or the amount of profit weeed per dollar of investment pecuniary resource was 26.9% for 2006 and 27% for 2005 for JCPenney and 8% and 10.4% for Macy?s. JCPenney?s return on assets was 11.2% for 2006 and 10% for 2005. Macy?s return on assets was 4.9% and 5.5%. These figures indicate JC Penney is a very profitable company.

While these cardinal companies are reasonably the alike(p) on net profit margin, JCPenney clear bulge outperforms Macy?s in return on righteousness and return on assets. Investors intelligibly are interested in how much profit they earn for each dollar invested. During this period, JCPenney offers a strong return for the investment. Investors must keep in intellectual that a key reach by Macy?s has been the secure of May?s ergocalciferol department stores and 800 bridal and evening clothes stores for approximately $11.7 billion on August 30, 2005. How this transaction plays out remains to be seen. recipe at liquidity... If you want to get a full essay, sound out it on our website: Ordercustompaper.com

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