Financial Analysis for J.C Penney and Target
Running head: Financial Analysis 1
Financial Analysis for J.C. Penney and Target
Sabrina Earnest
Columbia College
Author Note
This paper was prepared for Business Finance 350, taught by Professor Campbell.
Running head: Financial Analysis 2
Abstract
Running head: Financial Analysis 3
Working Capital Ratio
Working capital is the measure of a company’s efficiency and operating liquidity. The working capital is usually calculated by subtracting current assets from current liabilities. To find the Working Capital Ratio, divide current assets by current liabilities. Working capital can be positive or negative depending on how much debt the company currently has on its balance sheet. Generally, companies that have a lot of working capital will experience more growth in the future. These companies will be able to excel because they can expand and improve their operations using their existing resources. Companies with small or negative working capital may lack the funds needed for growth or future operations. Working capital also shows if the company has sufficient liquid resources to satisfy short-term liabilities and operational expenses.
For the past five years, J.C. Penney Company has gone through an increase and decrease in assets and liabilities. In January 2012, the Total Current Assets was 5.08 billion and Total Current Liabilities was 2.76 billion – the Working Capital is 2.32 billion and Working Capital Ratio is 1.8. In January 2011, the Total Current Assets was 6.37 billion and Total Current Liabilities was 2.65 billion – the Working Capital is 3.72 billion and Working Capital Ratio is 2.4. In January 2010, The Total Current Assets was 6.65
Financial Analysis for J.C. Penney and Target
Sabrina Earnest
Columbia College
Author Note
This paper was prepared for Business Finance 350, taught by Professor Campbell.
Running head: Financial Analysis 2
Abstract
Running head: Financial Analysis 3
Working Capital Ratio
Working capital is the measure of a company’s efficiency and operating liquidity. The working capital is usually calculated by subtracting current assets from current liabilities. To find the Working Capital Ratio, divide current assets by current liabilities. Working capital can be positive or negative depending on how much debt the company currently has on its balance sheet. Generally, companies that have a lot of working capital will experience more growth in the future. These companies will be able to excel because they can expand and improve their operations using their existing resources. Companies with small or negative working capital may lack the funds needed for growth or future operations. Working capital also shows if the company has sufficient liquid resources to satisfy short-term liabilities and operational expenses.
For the past five years, J.C. Penney Company has gone through an increase and decrease in assets and liabilities. In January 2012, the Total Current Assets was 5.08 billion and Total Current Liabilities was 2.76 billion – the Working Capital is 2.32 billion and Working Capital Ratio is 1.8. In January 2011, the Total Current Assets was 6.37 billion and Total Current Liabilities was 2.65 billion – the Working Capital is 3.72 billion and Working Capital Ratio is 2.4. In January 2010, The Total Current Assets was 6.65