Financial Statement Analysis

After establishing that Macy?s and JCPenney have adequate internal controls and social function an fencesitter public accounting firm to confirm the trueness of reports, the undermentioned step is to examine the relationship among fiscal affirmation metrical composition and the trends in those numbers over time. ? monetary statement compendium is used to evaluate the carrying out of a exhibition with an snapper toward identifying problem areas and to use the past performance of a company to predict how the company allow for do in the forthcoming? (Albrecht, Stice, Stice, & Swain 2005). This paper will analyze Macy?s and JCPenney financial statements by utilize financial ratios to determine makeability, liquidity, cogency and turnover, and leverage. So how do the companies compare using the profitability ratio? JC Penney?s net profit leeway (also called diminish 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 rectitude or the amount of profit weeed per dollar of investing funds 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 really profitable company.

While these two companies are moderately the same on net profit margin, JCPenney clear outperforms Macy?s in return on equity and return on assets. Investors clearly are interested in how much profit they earn for each dollar invested. During this period, JCPenney offers a strong re turn for the investment. Investors moldiness! keep in mind that a severalise work by Macy?s has been the purchase of May?s calciferol department stores and 800 bridal and formalwear stores for approximately $11.7 zillion on August 30, 2005. How this transaction plays out remains to be seen. expression at liquidity... If you want to get a encompassing essay, order it on our website: OrderCustomPaper.com

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