Problem

Analyzing RatiosSears, Roebuck and JCPenney are two giants of the retail industry. Both of...

Analyzing Ratios

Sears, Roebuck and JCPenney are two giants of the retail industry. Both offer full lines of moderately priced merchandise. Annual sales for Sears total $53 billion. JCPenney is smaller with $20 billion in revenues. Compare the two companies as a potential investment based on the following ratios:

Ratio

Sears

JCPenney

P/E

15.0

10.9

Gross profit margin

28.6

39.3

Profit margin

2.8

5.7

Current ratio

1.5

1.9

Debt-to-equity ratio

1.4

2.0

Return on equity

12.0

27.8

Return on assets

5.2

9.3

Dividend yield ratio

0.0%

1.4%

Earnings per share

$ 9.17

$ 5.20

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