Financial Analysis: Kohl's Company

Financial Analysis
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Financial Analysis
Financial
Financial and valuation analysis of Kohl’s (KSS) company focuses on the company’s financial performance and how the company is valued. The Return on Equity (ROE) is determined as the net profit divided by equity or net profit margin x total asset turnover x total leverage. The net profit margin was 0.071 in 2007, then 0.066 in 2008, 0.054 in 2008, and 0.058 in 2010 (Lundholm & Sloan, n.d.). However, based on the DuPont analysis, the total asset turnover and total leverage had a large impact on the retune on equity (ROE). From 2007 to 2010, the ROE decreased from 0.192 to 0.136 and was projected to decrease to 0.129 in the financial year 2022 (Lundholm & Sloan, n.d.).
 Profitability ratios depend on net profits and operating profits. The gross margin is determined gross profit divided by the revenue. Similarly, the EBITDA, EBIT, and net operating margins are determined as the EBITDA EBIT, and net operating profits are divided by sales revenue.
The turnover analysis focuses on asset management and how a company effectively manages its assets. The net operating asset turnover is determined as the sales divided by the operating assets, and operating assets are the assets supporting business operations to generate revenue. The net operating asset turnover declined from 2007 to 2011, indicating a decline in the company’s ability to sufficient volume of business using the net operating asset. To improve the turnover ratios, Kohl’s needs to increase sales and sell the assets or combine the two. The average days to collect receivables are determined by dividing the company’s accounts receivable balance b...