Case study Research Paper Example | Topics and Well Written Essays - 2000 words

Case study - Research Paper Example ng to firing of Ron Johnson, CEO within the first 17 months of operation the company is disturbed by trying to reorganize as it strives to remain relevant which has not been very easy. The company has been in operational for over 100 years. Its YOY revenues showed a 12% decline from USD 3.02 billion in 2012 to USD 2.66 billion in 2Q2013. The reason behind the declining trend is pegged on an unsuccessful strategy to change the business model. The company attempted to replace frequent discounts and promotions that were being offered and this was immediately followed by sharp lower sales, job cuts and high cash burns (Gilbertson, Mark & Daniel 142). The company default probability has sharply risen based on its weaker operating performance. The year probability of default rose to 8.5% from 0.4% in October 2012 showing a 2000% rise. JC Penny is ranked top as the riskiest Company based on the comparison of its 8.5% EDF measure that is calculated to be 101 times the median of the USD department Stores industry sector. This increase in the Company’s one year EDF is attached to the increases in financial risk or market leverage and its business risks also referred to as asset volatility (Gilbertson, Mark & Daniel 156). Its market leverage is analyzed to have more than doubled in the previous years with current figure estimated to be 69.2% which further affirms its riskiness. The failed attempted transformation of the model by the then company CEO, Johnson resulted into a sudden rise in business risks. The firm’s asset volatility rose to 24.4% from 19.5% between 2013 April and July 2012. From the IFE chart above we realize that the company scores about 2.52 which is almost the normal average requirement of 2.50. This means that the company is internal position is not good because it ought to have above the average (Gilbertson, Claudia, Mark, and Daniel 91). This further retaliate the earlier revelation by the growth ratios that the J.C Company is heading for bad