Analysing the income statement horizontally and vertically we can see that clear perspective of the statements so first taking up the sales figure we can see for the year 2019, 2018 & 2017 the sales figure of JC Penny Inc is $ 11,167, $ 12,019 & $ 12,873 respectively we can see a downward trend in sales as it is continuously falling year on year which is a bad indicator as its sales is decreasing the profits must be decreasing. On the other hand, Macy’s Incorp revenue figures are as follow for the year 2019, 2018 & 2017 sales made are $ 24,560, $ 24,971 & $ 24,939 here we can see the company is consistent in its revenue department which is good indicator for a company.
Now comparing cost of sales for both the company for JC Penney it is $ 7,013, $ 7,870 & $ 8,208 respectively for three years and for Macy Incorp cost of sales is $ 15,171, $ 15,215 & $ 15,181. If we see it as a percentage of sales then for JC Penney it will be 0.6280 or 63% roughly and for Macy it is 0.6177 or roughly 62% if we see then Macy is better than JC Penney in terms of cost of sales as it also scores better sales figure than its comparison.
Finally, I want to take depreciation and interest expenses for JC Penney we can see its has depreciation expenses charged to income account as it save tax expenses but on the other hand Macys Incorp has less depreciation as a percentage of revenue so and another factor that is Interest expenses JC Penney has comparative low interest expense and debt compared to the Macy’s Incorp.
Therefore, in this income statement comparison in my view JC Penney has better financial prospects.
Analysing the Balance Sheet horizontally and vertically we can see that clear perspective of the statements so first taking up the Cash & Cash Equivalent figure we can see for the year 2019 and 2018 the liquid cash available for JC Penny Inc was $ 386 million and $ 333 million respectively we can see a upward trend in Liquid Assets as it has risen year on year which is a good indicator as it shows the company has collected its account receivable during the year. It will help company to run its operation smoothly with less debt on its back. On the other hand, Macy’s Incorp Cash & Cash Equivalent figures are as follow for the year 2019 & 2018 the cash balance are $ 6,85 & $ 1,162. Here, we can see the company’s liquid assets has fallen due to reasons like lack of collection from receivables which may result in increase in bad debt or new acquisition of assets, it may result in increase in debt as company has to perform its operation which is bad indicator for a company as it will have more debt in its capital structure which investor doesn’t like nowadays.
Now comparing account receivables for both the company for JC Penney it has no account receivable standing in its balance sheet which is a questionable fact as why company has no account receivable but there is a explanation to this as may be company has made all their sales in cash...