An indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. Current ratio is equal to current assets divided by current liabilities. If the current assets of a company are more than twice the current liabilities, then that company is generally considered to have good short-term financial strength. If current liablities exceed current assets, then the company may have problems meeting its short-term obligations. For example, if XYZ
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indicates a weakness. RATIOS THAT MEASURE ABILITY TO SELL INVENTORY AND COLLECT RECEIVABLES INVENTORY TURNOVER Inventory Turnover indicates the number of times a company sells its average inventory during a year. To calculate the Inventory Turnover Ratio the Cost of Goods Sold (COGS) is divided by the average inventory. The Inventory Turnover for year 12 of Company G is 5.3. The Inventory Turnover for year 11 was 6.1 and the quartile data for the industry are 13, 10.2, and 8.3. The information shows
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providing detailed cost information. 5. Helps in Inventory Control: It helps in inventory by using various techniques such as ABC analysis, Economic Order Quantity, Stock levels, Perpetual Inventory system and Continuous Stock Taking, Inventory Turnover Ratio etc. 6. Helps in Cost reduction: It helps in the introduction of cost reduction programme and finding out new and improved method to reduce costs. 7. Helps in measurements of Efficiency: It helps in measurements of efficiency of operations
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A Team’s analysis of earnings per share, debt to asset ratio, current ratio, net profit percentage, total asset turnover, revenue, cash on hand, stock price, warehouse expenses, and cost per pair played a large role in the firm’s success. Ratio Analysis * Earnings Per Share * Debt to Assets Ratio * Current Ratio * Net Profit Percentage * Total Asset Turnover One measure A Team’s management tracked was earnings per share vs. the best in industry (if no data point A Team
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Case study: The Rise of Wal-Mart Wal-Mart demonstrates how a physical product retailer can create and leverage a data asset to achieve world-class supply chain efficiencies targeted primarily at driving down costs. Wal-Mart isn’t just the largest retailer in the world, over the past several years it has popped in and out of the top spot on the Fortune 500 list—meaning that the firm has had revenues greater than any firm in the United States. Wal-Mart is so big that in three months it sells
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Memorandum To: Board From: Alex Moret, 75960138 Subject: Zara Date: 2001 Root Problems International Expansion New expansion in other continents and countries trends may not match with a consistent similar global market. New stores can be franchised, partnered or own. Shipping from one centralized manufacturer and distribution centre has increased shipping costs and is harder to coordinate, especially with 10,000 products per year and re-stocked monthly. When a new store is opening,
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3927 28.2877 14.9253 Long-Term Debt to Equity 2.1617 1.9786 1.7462 4.8755 Activity Ratios: Accounts Receivable Turnover 32.5026, 116.7711 49.7515, 52.7208 Inventory Turnover Ratio: 4.98, 3.55, 1.89, 1.95 Looking at the key ratios during that period there were a lot of red flags. The audit risk for Crazy Eddie would be very high. Some of the major red flags were inventory turnover in 4 years went from 4.98 to 1.95. That shows that some of the accounting was incorrect. Some of the other red flags
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every dollar in current liabilities, Reed’s has $2.02 in current asset compared to $2.07 from the industry average. The receivable turnover ratio is 4.93. This is low and needs drastic improvement. The industry average is 7.7. The higher the ratio, the faster the company is collecting its receivables therefore, more cash the company has on hand. The inventory turnover ratio is 4.14 compared to 7.01 from
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particular way of financing an enterprise and as such is not considered liable to be called in on demand. 3) Inventory Turnover Ratio-It is a ratio showing how many times a company’s inventory is sold and replaced over a period. The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand or “Inventory turnover days” Sales may be substituted with COGS because sales are recorded at market value while inventories are usually recorded
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has 6.04% higher profit margin ratio. This company has 10.37% of each dollar of sales that results in net income. Higher gross profit rate results in higher profit margin for the company. Inventory Turnover Ratio 5.71 5.52 The numbers show that Tootsie Roll Industries has higher Inventory Turnover Ratio than The Hershy Company for 0.19. That means that Tootsie Roll Industries sell their goods faster and their average inventory turns 1.03 times/year faster than The Hershey Company's Inventory.
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