Financial Analysis

Abstract

This paper presents a financial statement analysis and a growth analysis that break down the return on common equity into two levels, as well as the price earnings ratio of two clothing companies based in two countries: the United Kingdom and the United States of America. The N Brown Group is a retail clothing firm operating in the United Kingdom, while Kohl’s Corporation is one of the many apparel firms located in the United States of America. These two companies are the centre of attention of this report.

An empirical analysis shows that the financial statement analysis explains the main drivers of operating and financing activities, and the growth analysis indicates the future investment performance of securities. The paper therefore concludes that the increasing return on common equity does not affect the price earnings ratio, which means that the market price is undervalued, and is therefore attractive to investors who may wish to invest in that stock. Accordingly, the paper compares the analysis of profitability and growth between the N Brown Group and Kohl’s Corporation, and recommends the more desirable company for investment.

Keywords: The N Brown Group, Kohl’s Corporation, Profitability analysis, Growth analysis, Return on common equity, Return on net operating assets, Financial Leverage, Operating Profit Margin, Asset turnover, P/E ratios, Thomson One Banker.

This paper attempts to compare two companies in the apparel retailers industry in two different national markets; the UK and US. The N Brown Group is a UK Company, and is a leading internet and mail-order catalogue home shopping company, with over 140 years of experience in the distance shopping market. The representative from the US is Kohl’s Corporation, one of the nation’s largest retailers. It is a family-focused, value-oriented, specialty department store offering