J. C. Penney Company, Inc. Equity Valuation and Analysis As of ...

ecause many firms in this segment of the retail industry no longer finance theirprivate label credit cards. Today, companies like GE Finance Corporation provideretailers with consumer finance services for a fee, which enable retailers to booksales immediately.Days Sales OutstandingDays Supply of Receivables7060504030JCPKSSDDSSSISMRT201002002 2003 2004 2005 2006YearDays sales outstanding is a measure of how long it takes for a company tocollect on its accounts receivables. This is also the second half of the cash-tocashcycle. The first half, days supply of inventory, is discussed later. In mostindustries, this process varies from 30 days to 90 days, but in the departmentand discount segment of the retail industry this number is typically low. Forinstance, J. C. Penney’s days sales outstanding over the past five years hasaveraged around six days. This is possible because J. C. Penney, like mostretailers in this industry, does not finance its own private label credit card.Instead, J. C. Penney pays a fee to a company, like GE Finance Corporation, tohandle consumer credit cards. In essence, the private label credit card acts like75