J.C. Penney Company, Inc. (NYSE:JCP) released preliminary earnings for the first three months of 2013 yesterday after the market closed. The release, which was part of a deal that sees the company take a $1.75 billion loan from Goldman Sachs Group, Inc. (NYSE:GS), seems to have been applauded by the market and shares in J.C. Penney Company, Inc. (NYSE:JCP) were up 7.62 percent at time of writing to $17.65 per share.

J.C. Penney

In the preliminary earnings J.C. Penney Company, Inc. (NYSE:JCP) revealed that it expects to show same store sales down 16 percent for the first quarter of the year, while the company expects to have burned about $950 million in free cash in the first three months of the year. Despite the dour figures, the market appears to have appreciated a look inside the company’s books.

A report from Piper Jaffray dealing with the company’s preliminary earnings reports concentrates on the firm’s cash burn, and sets up three different ways that J.C. Penney Company, Inc. (NYSE:JCP) could have gotten rid of the cash in the first quarter, and what each way means for the company’s future.

The first scenario stays in line with the previous model Piper Jaffray had for the company. According to this model, J.C. Penney Company, Inc. (NYSE:JCP) will burn $1.1 billion in the full year 2013, including the $950 million the company has already lost. That case will leave the company with full year sales of around $12.48 billion for the full year. This scenario puts a book value of $10.70 for the firm.

The second model, which Piper Jaffray calls its bull case, assumes that the company has used the cash positively and working capital will begin to stabilize in the year ahead. This will set the company up for a book value of $12.25, with an estimated cash burn of just $750 million for the year.

The third scenario is the Piper Jaffray bear case, and its terrifying reading for investors in J.C. Penney Company, Inc. (NYSE:JCP). It assumes that the company’s working capital remains unstable at a very low level. On this model, the company will lose $1.4 billion for the full year 2013, and its book value will be $9.16 for the year.

Even with the glimpse inside day to day operations in J.C. Penney Company, Inc. (NYSE:JCP) it is difficult for analysts to predict where the company is going. Shares are down more than 11 percent so far in 2013, and investors, despite today’s trading, are nervous.