Essay on Kohl Corporation and Dillard's Inc

The current ratio measures the company’s ability to pay its short term obligations with its short term assets. Between Coca Cola and PepsiCo, PepsiCo has a higher current ratio implying that is more capable of paying its obligations. The debt management policies of Coca-Cola in conjunction with share repurchase program and investment activity resulted in current liabilities exceeding current assets. From the ratio Pepsi Co suddenly had to pay all its short-term

The purpose of this paper is to advise analyze the financial statements of Dillard’s, Inc. in order to recommend whether or not my client should invest $1 million in the large retail company. I will compare the financial statements of Dillard’s, Inc. its competitor, Kohl’s Corporation. Investing in retail can be risky because a retail company’s performance is very heavily influenced by factors that have nothing to do with the actual company such as the overall performance of the economy or the weather during the holiday shopping season. There is, however, potential for profitability within the retail sector. Based on my analysis, I recommend that the client should not invest in Dillard’s, Inc. for the following reasons. First, Dillard’s has experience a decline in net income in the last three years. Second, liquidity ratios indicate that they could face possible liquidity constraints in the future. Third, long-term debt paying ability ratios indicate that the company could have trouble paying off the principal of its current debt obligations. Fourth, the profitability ratios are well below industry averages, suggesting that there are more profitable companies to invest in within the industry. And finally, Investor analysis ratios provide mixed opinion of the future performance of the company. I conclude that retail can be a profitable industry to invest in if an investor has the risk tolerance and risk capacity to withstand the uncertainty, but neither Dillard’s

This ratio indicates a company’s liquidity. It depicts how many dollars of current assets exist for every dollar in current liabilities. The ratio is the higher, the better. Home Depot and Lowe’s has increasing current ratio while Home Depot has a slightly higher one.

Department stores are not easy to manage, and take a whole team of individuals to run daily operations smoothly. Dillard’s success at the turn of the century came from balancing finances properly, incorporating a friendly atmosphere, and building its reputation as a welcoming upscale department store. In recent years, however, Dillard’s Inc. has surfaced in headlines for being listed as one of the worst companies in the nation to work for. With stiff competition and acquisition factors, the department store industry is not one to lag behind in and

This ratio is similar to current ratio, except that it excludes inventory from current assets. Inventory is subtracted because it is considered to be less liquid than other current assets, that is, it cannot be easily used to pay for the company’s current liabilities. A company having a quick ratio of at least 1.0, is considered to be financially stable. It has sufficient liquid assets and hence, it will be able to pay back its debts easily (Qasim Saleem et al., 2011).

Retail drug chain matches with K. It also has a similar balance sheet as retail grocery chain; however, some of the financing retail drug chains have received is through the sale of stocks, which shows are the large amount in common stock. Another distinction

The Kroger Company grew in 128 years from one store to over 3,500 stores of various banners and products. The Kroger Company is the largest food and drug retailer in the United States and is growing constantly with diversity in the retail market, dealing in food, pharmacies, apparel, jewelry and fuel. Kroger is governed by a 14 member Board of Directors including a Chief Executive Officer. Kroger is a leader in Corporate Social responsibility by maintaining environmental consciousness, social awareness and energy conservation awareness. Kroger is committed to customers, builds diversity and focuses on growth. The company operates a large part of it’s own manufacturing and distribution to increase profit

Overall regards to liquidity ratios, the higher the number the better; however, a too high also indicates that the firms were not using their resources to their full potential. Current ratio of 1.0 or greater shows that a company can pay its current liabilities with its current assets. JWN’s ratio increased from 2.06 in 2007 to 2.57 in 2010, and slightly decreased to 2.16 in 2011. JWN’s cash ratio increased significantly from 22% in 2007 to 80% in 2010. JWN has a cash ratio of 73% in 2011, which is useful to creditors when deciding how much debt they would be willing to extend to JWN. In addition, JWN also has moderate CFO ratio of 46%, indicating the companies’ ability to pay off their short term liabilities with their operating cash

Dollarama has increased in sales and assets from 2015 to 2016. In turn, the liabilities has also increased. The reason why is that liabilities increased Dollarama may be expanding. The more assets a company buys or more investments, it creates more liability. Usually, a high debt-to-equity ratio indicates that a company may not be able to generate enough cash to satisfy its debt obligations. Dollar Rama debt to cash ratio significantly increased over the year. Dollarama 2015 debt to cash ratio was low. You can look it as the company wasn’t taking the advantage of the increased profits that financial leverage may bring. Perhaps over the year, Dollarama took some risks and investments over the year and that lead to greater sales and assets numbers.

publication may be reproduced in any form for any purpose without the written permission of the

When looking at both of the financial statements, even though McDonalds may have a higher debt-to-assets ratio, it doesn't

In 1938 is when the “success story” of the Dillard’s company began. Even since a young age, William Dillard was interested by the retail businesses. After working for Sear’s for a little over seven years William Dillard wanted to start his own retail business. He asked his father for $8,000 to open a small store. William’s father gave him the money and he opened his first store, Nashville, Arkansas. After a while Dillard’s sold the Nashville store and took the money to buy a new location in Arizona. William Dillard continued to buy stores and his business flourished. Dillard’s became incorporated in 1964 in Delaware. (Company Profile, 5) Also, in the year 1964, Dillard’s opened its first store located in a shopping mall in Austin, Texas. In 1969 Dillard’s Inc. made it first initial offering to the public. The company continued to expand throughout the 70’s. In 2002 William Dillard died of heart failure.

Leverage and liquidity ratios in respect to the O.M Scott & Sons Company vary widely. The overall liquidity of the company does not indicate that lack of cash will impede their operational ability. Although the current ratio increases to a high of 4.2999 in 1960, their ability to meet short-term obligations should not be affected. However, it may indicate that there is too much inventory or cash could be better spent in other areas of the business. The financial leverage ratio increases from a low of .5335 in 1957, to a high of 1.3928 in 1961. This change shows that the company is becoming more dependent on using debt to finance its assets.

Accounts receivable turnover is the second method by which a company’s trade receivables’ liquidity can be evaluated (Gibson, 2011). Žager et al. (2012) noted turnover ratios should be as high as possible as this indicates a firm’s ability to convert its assets more often. 3M’s accounts receivable turnover for years 2007 and 2008 is shown in Exhibit 2. In 2007, 3M turned its accounts receivable over 7.12 times and 7.70 times in 2008. This calculates into a turnover of its accounts receivable every 51.28 days in 2007 and 47.38 days in 2008. The increase in accounts receivable turnover times per year (decrease in number of days to turnover accounts receivables) from 2007 to 2008 is a positive trend for 3M. It suggests, along with the prior calculation, the management of receivables is likely to be improving in efficiency.

These ratios help company in determining its capability to pay short-term debts. Liquidity ratios inform about, how quickly a firm can obtain cash by liquidating its current assets in order to pay its liabilities. General liquidity ratios are: current ratio and quick ratio. Current ration can be obtain by dividing company’s current assets by its’ current liabilities. Generally a current ratio of two is considered as good (Cleverley et al., 2011). Quick ratio also known as acid test determines company’s liabilities that need to be fulfilled on urgent basis. Quick ratio can be obtained by dividing quick assets by current liabilities. Quick ratio is considered as stricter because it excludes inventories from current assets. Generally a quick ratio of 1:1 is considered as good for the company. Higher quick