Jcpenney M&A


Is JCPenney a merger and acquisition target should JCPenney be pursuit for M&A. And the answer is no. Why should we not pursue JCPenney for M&A? It is because they are not a solvent company when looking at the graph in the upper right-hand corner. We see that the debt ratio for JCPenney has been over 80 percent since 2018 showing that over 80 percent of the company is backed by debt. And as of February 1st 2020, over 90 percent of their company is backed through debt, which is troubling since when. Looking at the graph below their return on equity is actually negative.

So for each dollar invested, they are getting a negative return as of 2018. And that number has been decreasing even more. And as of February 1st 2020, they are receiving around negative, 27 cents for every dollar invested in the company when looking at the net income, we see it that there's actually been a net loss since at least 2018, which has been at negative, 118 million and 2018 and has continually decreased to over double and. As of February 1st 2020. Just two years later is that negative 268 million dollars of net loss. When looking at the graph below, we see the Altman z-score, which shows less than one point, four since 2018, any Altman z-score below one point eight is deemed to be on the verge of bankruptcy, which has been true since at least 2018.

And actually has decreased the past two years whereas a February 1st 2020. They are just above one on the Altman z-score, which shows that they are on the verge of. Bankruptcy, and that is also given through their continually, decreasing net loss, their high backing of debt with their negative return on equity, showing that JCPenney is not a solvent company. Only making matters worse.

The coronavirus has shut their stores or only been making them an allowed to do some curbside pickup within the last few weeks. However, they've had to rely on liquid assets to make sure that they can still pay their expenses. And what during that period. They've also been getting. No revenue, no profit as they've not been able to make many sales, which already with their high net loss, it will continue to decrease as they've not been able to be even selling their merchandise throughout the past couple months during the pandemic that has occurred, therefore JC Penney should not be pursued as an M&A target.

Dated : 19-Apr-2022

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