Fin370 Week 4 Individual Assignment Reed's Clothier

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FIN370 Week 4 Individual Assignment Reed's Clothier

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<p align="center"></p><ol start="1"> <li> Profitability ratios are used to find out an organization’s success in a definite year. Both the gross profit margin as well as the net profit margin determines an organization’s operational profit. Return on ordinary equity determines returns for shareholders. While comparing Reed's Clothiers’ reports to that of the general industry, it is clear that the organization’s gross profit margin is slightly below the industry’s average. However, the organization’s return on ordinary equity and net profit margin is considerably below when compared to the industry as a group.</li></ol>Gross profit margin = Gross Margin / Sales= 607 / 2,035 = <b>29.83%</b> à compared to <b>33.0%</b> Net profit margin = Net Income / Sales= 85 / 2,035 = <b>4.18%</b> à compared to <b>7.8%</b> Return on common equity = Net income / Common equity= 85 / 530 = <b>16.04%</b> à compared to <b>25.9%</b><b> </b>Liquidity ratios are essentially ratios which are used in order to determine an organization’s capability to pay off its short-term liability. Current ratio as well as quick ratio must be greater than one. Concerning receivable turnover, high turnover is a fine thing, which demonstrates that there is sufficient collection happening as well as the collection period is short. While comparing Reed's Clothiers’ reports to that of the overall industry, it is clear that the store is lagging behind, which signifies they experience troubles in fulfilling collections as well as short-term commitments.<b><i> </i></b> Current ratio = Current assets / Current liabilities= 921 / 457 = <b>2.02</b> à compared to <b>2.7</b> Quick ratio = (Current assets – Inventory) / Current liabilities= (921 – 491) / 457 = <b>0.94</b> à compared to <b>1.6</b>
http://www.examtutorials.com/course/fin370-week-4-individual-assignment-reeds-clothier/Download answer at https://www.examtutorials.com/course/fin370-week-4-individual-assignment-reeds-clothier/
<p align="center"></p><ol start="1"> <li> Profitability ratios are used to find out an organization’s success in a definite year. Both the gross profit margin as well as the net profit margin determines an organization’s operational profit. Return on ordinary equity determines returns for shareholders. While comparing Reed's Clothiers’ reports to that of the general industry, it is clear that the organization’s gross profit margin is slightly below the industry’s average. However, the organization’s return on ordinary equity and net profit margin is considerably below when compared to the industry as a group.</li></ol>Gross profit margin = Gross Margin / Sales= 607 / 2,035 = <b>29.83%</b> à compared to <b>33.0%</b> Net profit margin = Net Income / Sales= 85 / 2,035 = <b>4.18%</b> à compared to <b>7.8%</b> Return on common equity = Net income / Common equity= 85 / 530 = <b>16.04%</b> à compared to <b>25.9%</b><b> </b>Liquidity ratios are essentially ratios which are used in order to determine an organization’s capability to pay off its short-term liability. Current ratio as well as quick ratio must be greater than one. Concerning receivable turnover, high turnover is a fine thing, which demonstrates that there is sufficient collection happening as well as the collection period is short. While comparing Reed's Clothiers’ reports to that of the overall industry, it is clear that the store is lagging behind, which signifies they experience troubles in fulfilling collections as well as short-term commitments.<b><i> </i></b> Current ratio = Current assets / Current liabilities= 921 / 457 = <b>2.02</b> à compared to <b>2.7</b> Quick ratio = (Current assets – Inventory) / Current liabilities= (921 – 491) / 457 = <b>0.94</b> à compared to <b>1.6</b>
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