The case examines the liquidity issues that J. C. Penney (JCP) experienced in 2012 and 2013 following a decline in sales and gains over several years. Despite once being a highly profitable and growing company, the increasing pressures of rivalry led to adjustments in strategy and in direction that were not sufficient to return the company to the consistent financial results it had formerly savored. In the meantime sales and profits faded, the cash balance additionally suffered, and Wall Street analysts began as the business wrestled with having enough cash to cover day-to-day operating needs, expressing liquidity anxieties. Students are requested to calculate a time series of quarterly liquidity and leverage ratios to exemplify the company's declining financial condition.
They are additionally challenged to weigh the positives and negatives of raising equity versus debt as an alternative for the company's dearth of liquidity. To measure the quantity of external capital needed, pupils are requested to make use of sources and uses evaluation for the cash flow challenges encountered by the company, that provides instinct. Set against the background of an iconic retailer, the case provides an engaging context in which to talk about the requirement for a significant capital structure confirmation due to operational endeavors.
PUBLICATION DATE: December 01, 2014 PRODUCT #: UV6895-PDF-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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