...Introduction Inventory turnover, the ratio of a firm’s cost of goods sold to its average inventory level, is generally used to measure performance of inventory management, analyze short-term liquidity, and assess performance improvements over time. In general, a higher value of inventory turnover indicates better performance in controlling inventory levels. And a lower value may be an indication of over-stocking which may pose risk of obsolescence and increased inventory holding costs. Inventory Turnover=cost of good sold/average inventory Average Inventory=(beginning inventory+ending inventory)/2 Gross profit percentage, the ratio of a firm’s gross profit to net sales, often used to judge operating profitability.The higher the gross profit percentage is, the healthier the business is. The gross profit percentage is a statement to measure how efficient the business is in making profit during the production process. Gross profit=revenue-cost of good sold Gross profit percentage=gross profit/revenue*100% Industries with higher gross profit percentages tend to have lower inventory turnover, and those two figures are different for different industries. There are several factors affecting those two ratios in different industries. First, the products’ price.High prices lead to high gross profit percentage, on the other hand, high prices lower the demand and sales, thus decrease the inventory turnover. Second, length of products’ life cycle. Businesses which produce...
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...In most businesses, the success depends on just how well the customers is pleased and that goes for everything. To make money, one must either sell something or render their services. And in order to successfully do so, one must bring to the table what the other person demands. There are so many businesses out in the world with every body hungry for money and some just plane greedy. Regardless, with all the completion out and all these business, it might be a little hard to stand out and show what makes your business different from that of another in the same genre. Everybody either copies each other or find a little something that sets them apart for a short while, because it won't be long until there is something better than the previous "new" thing. What makes these competition a little easier is the ability to wow the client. In a world of everything seemingly the same it is very important to have the quality that can wow the customers and make them want your business and your business alone, because of the fact that they will feel very comfortable getting that business from you. The wow factor is a quality that not everybody possesses unfortunately The wow factor in the hospitality industry is what really makes it successful no matter what branch of hospitality. Yes there are other things to consider as well such as the location, demographic as things of that nature. But having that wow factor will bring any hospitality industry from good to amazing! The wow factor is...
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...BEST BUY TURNOVER RATE AND EFFECT ON YEARLY SALES Prepared for Christy Eros General Manager of Best Buy Store #343 Prepared by Richard Bancroft Andrew Cordeiro Corey Webster December 3, 2007 MEMORANDUM DATE: December 3, 2007 TO: Christy Eros, General Manager FROM: Andrew Cordeiro, Richard Bancroft, Corey Webster, Project Team SUBJECT: Reducing Turnover Rate Here is the report you requested September 30 on the store turnover rate. As you suspected, the turnover rate is relatively high for the company and is increasing in our store. This problem has not been brought to attention because both the company and stores yearly sales have been increasing over the past few years. Though the store is doing well, it could be doing much better. Our employee's are what drives the store and makes it what it is. An increasing turnover rate has a negative effect on the stores bottom line. To support this, we surveyed a number of employees in our store and one of its competitors. The reason for conducting the surveys was to see what other employees thought of this problem. We also wanted to see if any other businesses experienced this, and if they did what solution they had. Some of our findings include various ways to predict and use turnover to prevent it. It will take a while for these possible solutions to go into effect and they will need some monitoring. One strategy we found that works for other businesses...
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...Relationship between Working Satisfaction and Employee Turnover Chen, Ying-Chang, Department of Hotel and Restaurant Management Ching Kuo Institute of Management and Health, Taiwan Wang ,Wen Cheng, Department of Business Management, Hwa Hsia Institute of Technology, Taiwan Chu, Ying Chien, Department of Tourism and Leisure, National Penghu University, Taiwan ABSTRACT In this paper, researchers evaluate a model of working satisfaction in employee turnover, survey data were collected from 100 hotel employees in XinHua hotel. The article proposes human resource management features based on the analysis of the reasons for the brain drain in the hotel, policies accordingly. There were several main findings from our empirical analyses. (1) Providing career advancement opportunities is critical for retention. (2) A mentoring program can help decrease the employee turnover of the small- and- medium –sized hotels. (3) High-quality communicating is valuable for hotel policy. (4) Pay and welfare also indicate significant position in Human Resource Management in the hospitality industry. The investigation of working satisfaction reflects the status of human resource in the hotels, through this, positive reactions can be made, and encouragement system can be adjusted, so that employees get more satisfaction, employee turnover is reduced and performance can be improved. Keywords: working satisfaction, hotel policy, employee turnover, XinHua hotel INTRODUCTION In face of an more and more...
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...Turnover is a serious problem for business today. Many companies are finding it more difficult to retain employees as the economy and job market improves. Baby boomers are also retiring in increasing numbers. The employment culture is changing as well. It is now common to change jobs every few years, rather than grow with one company throughout one’s employment life, as was the case with our fathers and mothers. Employees are also increasingly demanding a balance between work and family life. Turnover costs for many organizations are very high and can significantly affect the financial performance of an organization. Direct costs include recruitment, selection and training of new people, with a phenomenal cost of time and expense. Indirect costs include increased workloads and overtime expenses for coworkers and reduced productivity associated with low employee morale. Costs vary from organization to organization, some as low as a few hundred dollars to as high as four times the annual salary of the employee. This tool can help you calculate the cost of replacing an employee. It has been estimated that, on average, it costs a company one-third of a new hire’s annual salary to replace an employee. At Missouri’s 2015 minimum wage of $7.65 an hour, the cost to replace just one employee is more than $5,000. Causes. 1. Rude behavior. Studies have shown that everyday indignities have an adverse affect on productivity and result in good employees quitting. Rudeness, assigning...
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...I. Overview: After a company-wide diagnosis led by a team of our consultants from JD consulting, we have identified the main issues Lima Tire Plant is currently facing: high turnover rate along with serious morale issues with the line-foreman segment. Almost 50% of the foreman positions had turned over in 2007, which significantly escalated the recruiting cost and inevitably led to lost productivity during the transition period. The survey collected from line foremen indicated their dissatisfaction with their jobs and the low morale issues have been affecting the entire plant based on our interview results with management and hourly workers. II. Analysis: The root causes that account for current high turnover/low morale issue lie in several areas: A. Tremendous Responsibilities yet no authority: Foremen at Lima plant are held solely responsible for meeting performance goals. This leads them to work under extremely high pressure to ensure no technical/human issues would stop production. Their crude management style driven by the need to meet production targets has created tension between them and the hourly workers. Apart from this, they are also tasked to manage various union and administrative procedures. While having all these responsibilities, they are not involved in any disciplinary decisions. As one of the interviewed foreman pointed out, “We just don’t have any authority anymore and yet still have all the responsibility. No one listens to us as foreman, no one...
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...The Panasonic Corporation having a shorter operating cycle because the inventory and receivable turnover ratio are higher. This kind of result is better for the business because the flow the capital is fast. The receivables turnover ratio, 2014 Panasonic had $7,736,541 in net credit sales. The ending balance for 2013 $882,575 and that on December 31 it had $933,975 accounts receivable. With this information, one could calculate the receivables turnover ratio for 2014 in the following way: $7,736,541 / [($882,575 + $933,975) / 2] = $7,736,541 / ($1,816,550 / 2) = $7,736,541 / $908,275 = 8.52 The receivables turnover ratio is higher it imply a variety of things about a company. It show that a company operates on a cash basis, where the collection process it takes only for 42 days for them to use the money again. It indicate that the company’s collection of accounts receivable is efficient, and the Panasonic Corporation has a high proportion of quality customers that pay off their debts quickly. This high ratio indicates that the company has a conservative policy regarding its extension of credit. This is a good thing, as this filters out customers who may be more likely to take a long time in paying their debts. The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is managed by comparing cost of goods sold with average inventory for a period. This measures how many times average inventory is "turned" or sold during a period. In other words, it...
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...High employee turnover, in human resource management, refers to the speed at which employees leave jobs in a company and replaced by new hires. A company is said to have a high employee turnover rate because their employees continually leave or get fired, creating a need to hire more people to fill the open positions. The term “turnover” became known when employees of a business leave and new candidates fill the open position, but later fold or bottom out (Ingram). Although there are a few causes for high employee turnovers throughout businesses today and in the future. Turnovers are caused by numerous explanations. One of the main reasons for a turnover is unhappiness within a job. Nowadays most individuals take a job without knowing if they will like it or do well at it; jobs are too hard to come by in this day and age. Some business employers do not look at work experience or qualifications to see if the candidates qualify for the position, another reason for turnovers. Workers may quit based upon the inability to fulfill the job requirements. Employee/Employer communication is a vital key in any business situation. Fellow employees can be harsh and cruel causing others to feel uncomfortable and wanting to quit. These are just a few explanations for why the high employee turnover rate is high. High employee turnovers seem like a serious problem without any type of solutions. However, it can be controlled even stopped with a few possible solutions (Capko). One way to lower...
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...Turnover is a critical human resource issue that affects all aspects of an operations functions and performance. Main turnover impacts are reduced productivity, quality of product, remaining employee morale, and ultimately profitability of the organization. The cost of replacing workers is very expensive both tangible and intangible. The objective of this case to analyze and take action of COMPANY X’s current turnover, current turnover impact on business, drivers and types of turnover, actions to be taken short and long term in effort to greatly reduce employee turnover. Company X is joint venture composed of two foreign entities, one headquartered in South Korea and the second headquartered in the United States of America. The relationship of ownership is divided by Korean having 55% and American have 45% respectively. The main business activity is metal stamping with a focus on braking, exhaust, and other various mounting brackets. All financial capital invested has been delivered by both headquarters based on ownership percentages. The joint venture was established in year 2008, and production started in 2010. Revenue growth accelerated rapidly once start of production was initiated. Current management is handled by five expatriates, four from Korean and one from USA. The organization structure is President (Korean), Vice President (American), Sales/Administration Manager (Korean), Quality/Development Manager (Korean), and Production/Engineering Manager (Korean). Each manager...
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...a.) Ratios are useful indicators of a firm's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms in the same industry. Managers use ratio analysis to identify situations needing attention; potential leaders use financial analysis to determine whether a company is creditworthy; and stockholders use ratio analysis to help predict future earnings, dividends, and free cash flow. b.) The 2011 current ratio is calculated by using the following formula: current assets/current liabilities= 2,680,112/1,039,800= 2.58:1 The 2011 quick ratio is calculated by using the following formula: current assets-inventories/current liabilities=2,680,112-1,716,480/1,039,800=.93:1 The higher the current ratio the better the company’s liquidity because it provides insight about a firm's ability to meet its short-term financial obligations; therefore after calculating the 2009, 2010, and projected 2011 current ratio using the current assets/current liabilities formula we find the following ratios: 2009: 1,124,000/481,600=2.33:1 2010: 1,946,802/1,328,960=1.46:1 projected 2011: 2,680,112/1,039,800=2.58:1 The projected 2011 balance sheet leads us to believe that the year 2011 will have more liquidity than in the previous 2 years. Ratios are very useful to managers, bankers and stockholders for various reasons...
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...+ 295,000 = $595,000/2 = $297,500 $70,350/$297,500 = 23.65% c. Return on common stockholders equity $180,000 + $165,000 = $345,000 $345,000/2 = $172,500 $60,000/$172,500 = 34.78% d. Debt-equity ratio (12/31/08) $120,000/$180,000 = .67 e. Current ratio (12/31/08) $100,000/$105,000 = .95 f. Quick (acid-test) ratio (12/31/08) $27,000 + 36,000 = $63,000/$105,000 = .6 g. Accounts receivable turnover ratio (Assume that all sales are on credit) $36,000 + $37,000 = $73,000/2 = $36,500 $600,000/$36,500 = 15.4 h. Number of days sales in receivables 360/16.4 = 22 i. Inventory turnover ratio (Assure that all purchases are on credit) $35,000 + $42,000 = $77,000/2 = $38,500 $405,000/$38,500 = 10.52 j. Number of days sales in inventory 360/10.52 = 34 k. Number of days in cash operating cycle $405,000 + $35,000 - $42,000 = $398,000 $80,000 + 68,000 = $148,000/2 = $74,000 $398,000/$74,000 = 5.4 2. Overall financial health of SST Enterprises The smaller quick ratio is a problem for excess inventory. Inventory turnover is not a problem but compare it with the prior years. Payables time id longer than average and poses negative in operating cycle, no extra cash for financing. Need to know about the long term plans to evaluate the company’s financial...
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...Business Analysis: Haefren Baum “Show Me The Money” Christy Lopez Johnathan Putmon Harikrishna Patel Nikhil Dargani Darrell Springer Rayhaan Malik Financial Analysis and Introduction to Loan Structuring Professor Hadiye Aslan February 16, 2016 Name of the Business Haefren Baun Nature of the Business Haefren Baun is a retailer of furniture located in Germany. They have been purchasing furniture from the furniture manufacturing company, Wiegandt, which manufactures high-quality furniture. The retailer was once a partnership that was established in 1965, but later became incorporated in 1970. They have been purchasing furniture from Wiegandt since 1968. The company began operations in downtown Cologne but later expanded to three additional outlets in Rhineland. Marketing Analysis Haefren Baun’s product is high-quality furniture, where the company is focused on the German market. Business was booming until 1993, which then turned to a bust due to consumer confidence slipping. This leads to a decrease in demand for furniture, causing the demand cycle to experience a downward trend. The decrease in demand can be derived from the fact that the economy had declined by 1.2%. By the end of 1993, the sales figures were DM 18,647. The sales had decreased by approximately 19% from 1993 to 1994. Sales were on a steep decline and to entice customers, Haefren Baun had to lower their prices on the furniture. The reasoning behind this was also to maintain the sales volume. In...
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...University of Phoenix Material Definitions Define the following terms using your text or other resources. Cite all resources consistent with APA guidelines. |Term |Definition |Resource you used | |Time value of money |The idea that money available at the present time is worth more |Time value of money TVM. (2014). Retrieved | | |than the same amount in the future due to its potential earning |from | | |capacity. This core principle of finance holds that, provided |http://www.investopedia.com/terms/t/timevalueo| | |money can earn interest, any amount of money is worth more the |fmoney.asp | | |sooner it is received. | | |Efficient market |An efficient market is a market in which all the available |Titman, S., Keown, A., & Martin, J. (2014). | | |information is fully incorporated |getting started principals of finance. | | |into securities prices, and the returns investors will earn on |Finanical Managment, principles and | | |their investments cannot be predicted...
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...Butler Lumber Case Study I. Statement of Financial Problem Butler Lumber Company, a growing profitable business has exhausted its credit limit and the key issues facing it are: 1. Need for additional funds to continue the growth 2. Need to consolidate debt 3. Need to improve cash flexibility. In this case study I will be discussing following problem: Why has Butler Lumber been profitable in the increasing volume of sales but at the same time it is experiencing cash difficulties in 1988 – 1990? This is a historical problem and my calculations and assumptions are based on income statement and balance sheet for 1988 – 1990. II. General Framework for Financial Analyses There are different financial ratios and questions they answer: • Liquidity ratio – current ratio: Will Butler Lumber be able to pay off his debts as they come due? Satisfactory liquidity ratio is necessary if Butler Lumber is to continue its operations. • Asset management ratio: Does Butler Lumber have the appropriate amount of assets versus sales? How effectively is Butler Lumber managing its assets? • Debt management ration: Does Butler Lumber have the right mix of debt and equity? • Profitability Ratios: Are sales high enough? Do sales exceed the unit cost? It is necessary to calculate different types of financial ratios to examine different aspects of Butler Lumber’s operations. Key accounts for sources of funds for Butler...
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...ACCT 313 Intermediate Accounting I Financial Statement Application #2 Inventories The purpose of this assignment is to help you understand how the inventories concepts discussed in Chapters 8 and 9 of the textbook apply in a real-world company. To complete this assignment, you will need to use Starbucks’ 2013 Annual Report (available on Blackboard). Prepare type-written responses to the following questions. Include appropriate references to the Annual Report. The assignment will be graded on correctness and presentation. Hand-written work will not be accepted and late assignments will have five points automatically deducted. 1. What types of inventories does Starbucks have? Coffee (Unroasted and Roasted), other merchandise (serveware and tea) held for sale, breakfast food, packaging and other supplies Pg69, Notes 5 Inventories 2. of the end of fiscal 2013, what is the balance sheet carrying value (book value) of Starbucks’ inventories? $1,111.2 Pg53, “Starbucks Corporation Consolidated Balance sheet” 3. Is this the same amount that Starbucks paid to its suppliers to purchase these inventories? Why or why not? Pg15, “Product supply” No. There were $882 million, comprised of $588 million under fixed-price contracts and an estimated $294 million under price-to-be-fixed contracts.The reason that there will be difference between the price that Starbucks paid to its suppliers and the value shows on balance sheet is $294 million price-to-be-fixed contract...
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