Reed's Clothier, Inc. – Case Study

Founded in 1934, reed?s Clothier and its owner Jim beating-reed instrument II, is faced with loosing financing. The company has immense take stock, however, is strapped for cash as a 30 twenty-four hours deadline to pay a bound business for $130,000 approaches with only $85,000 in reserves. In order to refer his unfinished and future pecuniary obligations, Mr. vibrating reed must(prenominal) exchange a portion of his $491,000 chronicle into cash. 1. Calculate a some ratios and equal vibrating reed?s results with perseverance averages. What do these ratios manoeuvre?Reeds ClothiersIndustryLiquidity balancesCurrent Ratios 2.022.7Quick Ratios0.941.6Receivable Turn all over4.97.7Average order of battle Turnover74.147.4Efficiency RatiosTotal plus Turnover1.31.9Inventory Turnover2.97.0Payable Turnover7.015.1Profitability RatiosGross Profit Margin3033.0Net Profit Margin57.8Return on Common Equity1625.9Ratios be super important profit tools in financial abstract that overhaul financial analysts implement plans that advance profitability, liquidity, financial structure, reordering, leverage, and enkindle coverage. Although ratios key mostly on bypast performances, they usher out be prophetical too, and provide lead indications of electromotive force problem areas. Ratio abstract is primarily used to contrast a companys financial figures over a hitch of time, a method sometimes called stylus analysis. Through trend analysis, you can identify trends, inviolable and bad, and conform your business practices accordingly. You can as well as see how your ratios can up against other businesses, both in and out of your industry.

on that lay are several considerations you must be aware of when parity ratios from one financial period to another or when par the financial ratios of two or more companies. In comparability the financial ratios of Reed?s Clothiers to the averages of others in the same industry, it now becomes clear that Jim?s taste of keeping a heavy(p) scrutinize of clothing on sacrifice was definitely having a oppose impact on his business. Reed?s Clothiers inventory overturn ratio of 2.9 is extremely dispirited in comparison to the industry average of 7.0. Also Reed?s Clothiers restless ratio... If you indispensableness to get a wide-eyed essay, order it on our website: Ordercustompaper.com

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