Reference no: EM1359225

I need a detailed Financial Analysis of JC Penny and Target stores for Five years.

Make sure you calculate all of the ratios and be sure to use the Financial Statements for the most recent fiscal year filed with the SEC. They can be found on the company websites. Also, tell me what they mean to you. That will help you focus on the recommendation you are going to make in two weeks. For more information, see the Course Project documentation in the Content area.
Mr. Moovon expects you to begin with the Balance Sheet.

1. Start with the Capital Accounts. How do they differ? How are they the same? Are they realistically presented? What are the Book Values, and what are the present Ratios of the stock Prices to Book Value.

2. Now look at the Fixed Assets (the Property Account).

Do either of your companies show as Assets items that need explanation? What are they?
How are they explained? You might have to go into the footnotes to the Financial
Statement to find the answers.

3. Are the Non Current Assets material and how are they explained? Are there material
Intangible Assets? What would be material for companies as
large as the ones you are working with?

4. Do your companies have Deferred Tax Accounts? How are they treating taxes?

5. Now let's look at the Current Assets. Are the companies maintaining adequate liquidity?
Mr. Moovon is going to want to see the relevant ratios, so you had better calculate them
and have them ready.

6. Liabilities. As Mr. Moovon always says, "You can't be sure about the Assets but the
Liabilities are always real." Does either company have too much debt? If so, CB&M
won't touch them. Can either company carry significantly more debt? How much more?
CB&M always loads the companies it acquires with as much debt as they can carry.
That's how they finance the deal.

7. Are there any hidden assets?
Now move on to the Income Statement.

1. Are the companies as profitable as they should be? What ratios would tell us that? OK!
Now calculate them. Let's see those Efficiency Ratios.

2. Now that you have calculated the ratios, what can CB&M do to make them more
profitable? What do you suggest?
As a double check let's run a DuPont Analysis on both companies.
Put a value on both companies. Calculate some valuation ratios like Price/Book Value,
Price/Earnings per Share (make sure you use fully diluted share numbers), Price/EBITDA per Share.

How do these ratios compare with some other retail operations? You might want to compare these companies to others in their field or some other big box retailers. What is the current market value (debt and equity) of each of the two companies? Mr. Moovon will need to know this to formulate a reasonable bid (or walk away).