JC Penney was founded in 1902 by James Cash Penney who wanted to build a store based on what he referred to as the “Golden Rule”: treating customers “Fair and Square”. After 110 years JC Penney is restructuring itself because it feels that it has lost some of its values in their pricing and endless amount of promotions and sales. They are focusing on remodeling their seven main values: personality, price, promotion, people, place, product and presentation. JC Penney has a new management staff composed of new and old leaders. They now have only 12 sales events each year, one for every month, unlike the 590 they used to have before.
The TJX has the greatest gross profit margin, it is the most profitable company. Return on investment ratio for JC Penney is negative which means that the investor did not have any return on his/her investment, in fact he/she experienced a lost in investments. Compared with its competitors, TJX has the largest return on investment. The return on assets ratio is negative for JC Penney as well, while TJX has the highest ratio. This means that TJX generates the highest profit from using their assets. The price-earnings ratio indicates how much investors are willing to pay per dollar of current earnings.
JC Penney’s price-earnings ratio is negative, which is unappealing for investors. The competitors’ price-earnings ratios have dropped compared to the 5 year average but due to the economic crisis. Inventory turnover for JC Penney is 2. 5 which is below the industry average (3. 70).
The Term Paper on Maximing Returns On Foreign Investments
The Philippine government is encouraging foreign investors to invest in the country with businesses that will provide opportunities in employment, develop the productivity of resources, heighten the volume as well as the value of exports and provide the future development of the economy’s foundation. The Foreign Investments Act (“FIA”) of 1991[1] liberalized the entry of foreign investments into ...
This means that JC Penney turns over their inventory 2. 5 times during year. TJX turns over their inventory 5 times during the year, in fact TJX is the only competitor whose turn over inventory average is above the industry average. As stated in Fundamentals of Corporate Finance by Stephen A.
Ross, the Beta indicates “the amount of systematic risk present in a particular risky asset relative to that in an average risky asset” (427).
The Beta for JC Penney and TJX is above industry average- that means that these companies would have a greater expected return. Systematic risk or market risk is the risk that affects a large number of assets. Examples of systematic risk are inflation or increasing the interest rate, or any uncertainties in the economy but not the company’s performance. Unsystematic risk is the risk that mainly associated with specific companies or may be some competitors and suppliers.
The systematic risk affects the whole market and cannot be controlled by investors. Unsystematic risk however affects the company and is controlled by the company’s performance. When investors invest money into a company they must research all aspects of that company so they are aware of the unsystematic risks they may encounter. JC Penney is an unfavorable choice for investors because the company analysis indicates that the company is unprofitable. Along with the bad financial analysis and the radical changes the company is making JC Penney is not likely to recover from their mistakes in performance.
They have lost many customers and even with their new plan to change the store and its values they are not likely to reverse the effects of their actions. Now with the dividend cuts that JC Penney has made, many shareholders are losing their trust in the store and doubting whether or not it can afford to pay back for these cuts as well as if they are making smart choices. If I was an investor I would not invest in JC Penney but instead would invest in TJX because they have a better financial position and are making better decisions. References
The Business plan on Questar Company Risk Analysis
INTEROFFICE REPORT Questar Corporation: Energy Company October 6, 2004 Prepared for: S. E. Parks, Senior Vice President and Chief Financial Officer Prepared by: Cathy Caton, Accountant Three segments of Questar operations cover resources and regulated services. Follows is the risk assessment for Questar: Resources, Lack of internal control in estimating reserve (s) revenue, Financial analysis and ...
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jcpenney Media Room. Retrieved February 10, 2013, from http://www. jcpmediaroom. com/posts/37/J. -C. -PENNEY-COMPANY,-INC. -REPORTS-2011-FOURTH-QUARTER-AND-FULL-YEAR-FINANCIAL-RESULTS J. C. Penney Company, Inc. Holding Company Competitors – NASDAQ. com. (n. d. ).
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Saving. Spending. Investing. Planning. Everything you need for a lifetime of financial decisions. — DailyFinance. Retrieved February 10, 2013, from http://www. dailyfinance. com/quote/nyse/kohls-corp/kss/financial-ratios Ross, Stephen A. , Randolph W. Westerfield, and Branford D. Jordan. Fundamentals of Corporate Finance. Boston: McGraw-Hill Learning Solutions, 2012. Print. Summary annual report. (n. d. ).
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