Hot Fashion Case Study

2387 Words 10 Pages
Register to read the introduction… This ratio is often referred to as the net profit margin. It shows for every £1 made in sales how much of it is left as net profit after all expenses have been deducted. Looking at Hot Fashions business their net profit percentage of sales is 8.49%, therefore means that for every £1 of sales made, 8p is left as net profit. The business had a great strength as their net profit margin is over 7.98%. The reason this is a good sign is because the retail clothing industries average net profit margin is 7.98%. However, the business also has weaknesses. Looking at bigger businesses such as Nexts PLC net profit margin it shows 14.99%. Hot Fashions should try to reduce its expenses and try hard to increase its sales. This is due to Hot Fashions had only increased by 2.49% from the average retail clothing industries. They should aim to increase to a higher percentage like Next PLC although Hot Fashions is a small business. If the Net Profit does increase the investor has a chance of receiving dividends, and more money is given back into the company, and the business would have a better label and reputation as investors would most likely be interested in their …show more content…
Hot fashions are 3x more than Next PLC business. This displays that Hot Fashions business is holding too much stock which may increase inventory holding costs. This could have a big effect on their business. Payable Days= 30.2 days Payable (creditor) days are a measure of the number of days on average that a company requires to pay its creditors. It is an indication of a company’s creditworthiness in the eyes of its suppliers and creditors, since it shows how long they are willing to wait for payment. . The Hot Fashions payables ratio measures on average how long it takes their business to pay for goods and services bought on credit; it is expressed as a number of

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