Question

$ in millions except for ratios	2019	2019
Ratio	Nordstrom	Kohl's
Net Working Capital	-$290	$1,880
Current Ratio	0.92	1.68
Quick Ratio	0.29	0.26
Accounts receivable turnover	23.74	N/A
Average days to collect receivables	15.377	N/A
Inventory Turnover	5.10	3.46
Average days to sell inventory	71.63	105.41
Debt to Assets	0.90	0.63
Debt to Equity	8.95	1.67
No. times Interest Earned	0.13	0.19
Plant Assets to Long-term Liabilities	3.96	1.56
Net Margin	0.033	0.037
Asset Turnover	1.554	1.297
ROI	5.09%	4.75%
ROE	50.7%	12.7%
Earnings per share (find in I/S)	3.20	4.39
Book Value per share	6.32	34.71
Price Earnings Ratio https://finance.yahoo.com/lookup/	9.08	11.61
Dividend Yield    5yr. avg https://finance.yahoo.com/lookup/	3.91	5.39

Please write a summary of what the ratios tell about the relative strength of the two companies above, example-which company appears stronger based on the ratios. Which ratios are similar (not more than 1 page). Why would Nordstrom be the best choice of company to investment in.

Answer 1

Determining a stock's suitability for your financial goals requires analyzing specific ratios from the company's financial statements and comparing those financial ratios to benchmarks and to other companies in the industry.

Price-Earnings Ratio

The price-earnings (P/E) ratio is the primary financial ratio that fundamental analysts use to value a company's stock. The ratio compares the share price to earnings per share (EPS). The average P/E ratio varies by industry, but across the board, it is around 15.

Price-to-Book Ratio

The price-to-book (P/B) ratio compares the company's market value, which dictates what shareholders pay to own the company, to its book value, which dictates what the company is really worth from an accounting perspective.

Return on Equity

Return on equity (ROE) expresses net income as a percentage of shareholders' equity. A company's ROE is a great indicator of how efficiently its management team is performing. Savvy investors want to see that management is able to parlay the company's equity into strong earnings. Hence, a higher ROE is usually a better ROE.

ROE values above 10% are considered strong; an ROE above 25% is considered to be excellent

Debt/Equity Ratio

Even a mature, profitable company sits in a tenuous financial position if it cannot manage its debt. Recessions and market downturns expose companies that have been too reckless with their debt management. The debt/equity (D/E) ratio expresses a company's total debt as a percentage of its equity. Ideally, a company's debt should be lower than its equity, which means a D/E ratio of under 100% is preferable.

Current Ratio

A company's current ratio measures its ability to pay its current debts, defined as those due within one year, and is a measure of a company's short-term liquidity. It does so by comparing the company's current liabilities with its current assets, meaning those that can be converted to cash within a year or less.

The formula is current assets divided by current liabilities. A value of 1.0 or higher is preferred. Many value investors consider 1.5 to be an ideal current ratio

BASED ON ABOVE Nordstrom be the best choice of company to investment