Case #16 - Reed Clothiers

IntroductionFaced with a loss of financing by his long standing(a) family intrust, as well as a 30 daytime deadline in which he moldiness pay a $130,000 bank note, Jim beating-reed instrument II, the owner of reed instrument?s Clothier is instanter facing what he considers to be a monumental pecuniary crisis. Inventory rich, merely cash strapped, with only $85,000 in reserves, Jim must now cursorily convert a large member of his $491,000 stock certificate into cash, in order to meet his pending and prospective pecuniary obligations. Through the analysis of various pecuniary proportions we leave feces attempt to gain insight into how Jim Reed managed to find himself in his current dire predicament, as well as have got an eye on the means by which he superpower restore his family backup to full financial health. 1. Calculate a few dimensions and equal Reed?s results with labor comelys. What do these ratios indicate? monetary ratios are a valuable and thriving wa y to scan the numbers found in statements. It can help to firmness of purpose critical questions such as whether the business is carrying excess debt or inventory, whether customers are paying accord to terms, whether the operating expenses are in like manner mellowed and whether the company assets are being used decent to induce income. When computing financial relationships, a good reading of the companys financial strengths and weaknesses becomes nominate.

Examining these ratios over time provides some insight as to how effectively the business is being operated. In comparing the financial ratios of Reed?s Clothiers to the averages of others in the ! same industry, it readily becomes clear that Jim?s preference of keeping a large inventory of enclothe on hand was definitely having a minus pretend on his business. Reed?s Clothiers inventory swage ratio of 2.9 is extremely low in comparison to the industry average of 7.0. Also Reed?s Clothiers quick ratio is... If you wish to get a full essay, order it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay