The case examines the liquidity issues that J. C. Penney (JCP) experienced in 2012 and 2013 following a decline in sales and profits over several years. Although JCP had been a highly profitable and growing company, the increasing pressures of competition led to changes in strategy and in management that were insufficient to recapture the consistent financial results it had previously enjoyed. While sales and profits waned, the cash balance also suffered, and Wall Street analysts began expressing liquidity concerns as the company wrestled with having enough cash on hand to cover daily operating needs. The case introduces students to the causes of a liquidity crunch for a large, established company. Students are challenged to decide when the company should raise external capital and when it should consider the benefits and drawbacks of raising equity versus debt. Focusing on an iconic retailer, the case provides an engaging context in which to discuss the need for a major capital structure decision due to operational challenges.