The following ratios for Kohl's Corporation and its competitor Dillard's, Inc., were obtained from reuters.com/finance. Compare the two companies based on the following ratios:
Ratio Kohl's Dillard's
Debt-to-assets.................... 0.96......................... 0.98
Asset turnover ratio.............. 1.39........................ 1.40
Net profit margin.................. 6.1% ......................4.9%
Required:
1. Which company appears to rely more on debt for financing? Describe the ratio that you used to reach this decision, and explain what the ratio means.
2. Which company appears to use its assets more efficiently? Describe the ratio that you used to reach this decision, and explain what the ratio means.
3. Which company appears to better control its expenses? Describe the ratio that you used to reach this decision, and explain what the ratio means.