Reed's Clothier

vibrating beating-reed instrument’s haberdasher discipline Study & Assignment vibrating reed’s Clothier Case Study & Assignment 1. If we appearance at the ratios, we find that Reed is myopic on all the parameters. Its be adrift and quick ratio is slight than persistence and so liquidity is poor. It used to a greater extent assets than the pains and hence the efficiency in the use of assets is low. It keeps much more ancestry and collects specie more slowly and that possible makes the payables derangement low since it pays after a longer time to the assignors. The positivity is also poor with apprize gross margin and solve margin. The return on light play is also less(prenominal) than industry average. 2. Holmes wants Reed to hold back an list decrement sales event to become bullion. The none is glide path over receivable and at that mastermind is not plenty specie to riposte hence note. by dint of an buy in-take reduction sale, which open fire be on bullion basis, Reed can generate enough cash to deliver the note. The note is due for $130,000 and the tote up breed with Reed is $491,000. With an inventory reduction sale at lessen prices, enough cash can be generated to repay the note. 3. There is a fortuity that it may affect sales.

We look at both(prenominal) the inventories and accounts receivables – ❖ Inventory – reduction in inventory would criminate that at some full point in time in that respect may not be the type of inventory that is inevitable for sales. The accident of stock appear increases. presently there is a spicy amount of inventory and so there is actually slim possibility of stock outs. As the inventory is reduced and if it is not managed properly, there is a possibility that right inventory is not available at right time and so a sale is lost. ❖ Receivables – Currently Reed has a rattling relapse credit commandment with average collection issue of 74.1 days as compared to industry average of 47.4 days. As it tightens the credit policy, there is a possibility that some customers who were buying due to the higher(prenominal) credit period world given may no longer buy from Reed. at once the...If you want to get a full essay, order it on our website: Ordercustompaper.com

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