Kmart Analysis Essay Example | Topics and Well Written Essays - 1250 words

Kmart Analysis - Essay ExampleKmart deals in a wide range of retail products. The company principally provides the grocery items on its retail stores along with other consumer products such as womens and kids apparels, fashion clothing, gifts, toys, baby and kids beddings, furniture, nursery products, jewelry, electronics, home appliances, fragrances, personal care items and sports, leisure and fitness goods etc (Kmart Home, n.d.)Kmarts business trading operations fall under discount retailing industry. It confronts with overwhelming competition in the industry from the significant retail giants such as Wal-Mart, bespeak stores, Kohls and J.C. Penney etc.Kmart has shown a comeback in the industry after the bankruptcy with a vision to deliver value to its customers and shareholders in an identical manner. It aims for constant expansion with a situation to advance in terms of sale and profitability records, to enhance the efficacy and alleviate the costs, to strengthen and elevate the utilization of assets towards increasing profits etc (Corporate muniment, n.d.)The following chart depicts a snapshot of K-marts financial ratios (Kmart Corporation, n.d.) compared to the discount retailing industry average (Retail (Department & Discount) Industry, n.d.) along with two of its competitors i.e., Wal-Mart (Ratios for Wal-Mart, n.d.) and Target (Ratios for Target, n.d.), so as to provide a better insight into the companys financial position and performance with respect to that of its industry and competitorsKmartIndustryWal-MartTarget spry Ratio2.00.260.130.89Current Ratio3.61.170.891.50Debt to Equity0.930.550.540.70Gross Margin25.9%27.50%23.17%32.15%Net Profit Margin5.6%3.80%3.49%4.58%Return On Assets10.1%7.43%8.32%7.30%Cash Conversion Cycle67 days39 days14 days39 daysAn examination of the above chart straightens out a fine line betwixt Kmart, its major competitors and the whole discount retail industry. The further in-depth interpretation and analysis of the abo ve presented ratios is provided below to compare Kmarts financial position and performance with its competitors and other companies in the same industryCurrent RatioThe electric current ratio reflects the liquidity position of a company in terms of a comparison of its current assets and current liabilities. Kmarts current ratio is 3.61, which means that the company keeps $3.6 worth of liquid assets against every $1 worth of current liabilities. The current ratio of Kmart is such(prenominal) higher(prenominal) than that of the discount retail industry as well as Wal-Mart and Target Corporation individually. Apart from showing a sound liquidity position of the company, it emphasizes the fact that much of the companys current assets are lying idle without being invested further.Quick RatioAn investigation of the above ratio comparison reveals that the Kmart Corporations quick ratio is much higher than that of its industry and competitors. Kmarts quick ratio is 2.0, which shows that Kmart is much capable to pay off its short-term debts and liabilities after keeping aside the inventory than all the other companies in the industry. The difference between the current and quick ratios explicit the quantity of stock held by company, which is about 55% of the total current assets for Kmart.Debt to