Dupont Analysis on Jc Penney and Nordstrom

2983 Words Jan 20th, 2007 12 Pages
Dupont Analysis
J.C. Penney 's, Inc. versus Nordstrom, Inc. | Fiscal years 2005 and 2004
Refer to Figure 1.
During fiscal year 2005, both J.C. Penney 's Inc. ("Penney 's) and Nordstrom, Inc.
("Nordstrom") provided similar and high returns on their shareholder investments, at
27% and 26%, respectively. Both companies ' 2005 returns on equity ("ROE 's") are up from prior year. While Nordstrom posted a significant increase in ROE by 20% over prior year, Penney 's ROE is up 152% over its 2004 ROE.
While it is notable that both companies have strong 2005 ROE 's and have increased their
ROE 's since 2004, there is a very large variance in ROE growth between the two companies. This suggests that although the 2005 ROE 's are similar, the
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Inventory 3,210 1 3 ,142 1 956 1 917 1
Profit margin (return on sales)
Net income 1 ,088 524 551 3 94
Sales 18,781 5.79% 1 8,096 2.90% 7 ,723 7.13% 7 ,131 5.53%
Retail Gross Margin Percentage
Gross Margin 7 ,376 6 ,989 2,835 2 ,572
Sales 18,781 39.27% 1 8,096 38.62% 7 ,723 36.71% 7 ,131 36.07%
COS as a % of sales 60.73% 61.38% 63.29% 63.93%
SG&A/Sales
SG&A Expenses 5 ,799 5 ,702 2,101 2 ,020
Sales 18,781 30.88% 1 8,096 31.51% 7 ,723 27.20% 7 ,131 28.33%
Long-term debt/Asset
Long-term debt 3 ,444 0.28 3 ,464 0.25 628 0.13 9 29 0.20
Total assets 12,461 1 1 4,127 1 4,922 1 4,605 1
Interest coverage
NI before tax 1 ,488 8.80 6 94 3.11 885 19.67 648 8.42
Interest expense 169 1 2 23 1 45 1 77 1
Current ratio
Avg. Current assets 6 ,702 2.43 8 ,232 2.50 2,874 1.77 2 ,572 1.92
Avg. Current liabilities 2,762 1 3 ,297 1 1,624 1 1,341 1
Quick Ratio
(Cash+ST Invest + AR) 3 ,286 1.19 4 ,923 1.49 1,157 0.71 1 ,048 0.78
Avg. Current liabilities 2,762 1 3

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