C. Penney Company, Inc. is a department store in the United States, with approximately 864 store locations. Since its inception, the company has engaged different strategies to increase its revenues and lower its costs. For instance, to achieve its growth and profitability over the years, the company has had to close down the underperforming stores and focus on cutting unnecessary costs. An analysis of the company’s financial statements for the past three years shows that the company has experienced significant loses. For instance, as of 31st December 2016, JCP made a loss amounting to $513,000. An improvement in 2017 reflected a net profit of approximately $1000. In 2018, the company made a loss of $116,000 and now, the company stands at a loss of $255,000. Therefore, there is a trend that the company is operating under significant financial losses.
The sales growth estimates from the year 2019 shows negative percentages, which signifies that the company will not achieve significant growth in the next few years. In considering the company’s growth, from 2016 to 2017, the sales drop was -0.62%. Between 2017 and 2018, the decline was at -0.33%, whereas between 2018 and 2019, the fall is at -3.9%. The trend shows that the company has been experiencing a significant sales drop to show that there is no growth. The financial leverage or debt to equity ratio in the past three years was 3.96, 3.89, and 4.07. The current stock price at JCP is $1.64. The company has not paid out dividends or sold stocks in the past three years, thereby showing that it is not worth investing in this company.
The financial analysis of JCP shows that the company has been going through some financial difficulties in the past years. Also, the management of the company believes that the only way the company can stay afloat is by cutting back on some areas or discontinuing operations in some stores. Since 2016, the sales revenues have been dropping, and the company has made losses. Moreover, the company has been in in a position to pay out dividends. However, despite the challenges, the management of the company believes that in focusing on the areas that are doing well and eliminating the less productive stores, the company has a chance to remain afloat and possibly pick in the next financial years.