Profitability Ratios:
The proforma trend for 2007’s gross margin remained at 28.5%. These larger COGS would continue to effect the organization to the 2007 year. However, it should be noted that the ROE for Brodie Industrial Supply was larger than the industry average at 47.5% compared to the industry at 14.4%. This difference can be attributed to the expansion of their faculties as well as their sustainable growth which occurred from 2004 to 2006. The 2007 trend indicates that profitability will slow down but would still have significant growth in the 2007 year.
If the company intends to remain competitive against the big box stores they will have to find a way to lower their COGS to either increase profitability or offer competitive prices
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However, Brodie Supply has remained above the industry ratio until 2006. This trend will likely continue with the figured derived from the proforma statement. This is attributed to Brodie Industrial Supply’s expansion which tied up cash into other fixed assets and inventories. Their current ratio is satisfactory as the organization has a ratio greater than one meaning they have the current assets to meet their current liabilities Specific attention should be given in the following years as the current ratio will drop below the industry average in 2007. Overall, Brodie Supply has maintained a good current ratio which has helped achieved their goal of having a positive relationship with their suppliers and …show more content…
It was stated in the case that new competitors from big box stores such as Home Hardware and Rona were entering the environment. These organization would have a very high ratio compared to Brodie Supply. This is why Brodie Supply has focused on increasing their fixed assets and inventory to compete with the big boxed stores.
Interest coverage has increased for Brodie Supply do to the increase of financing the company took on in 2006 to expand their facilities.Net worth to total assets will increase slightly to 10% in the proforma 2007 year as fixed assets increase. They are still under the industry average. If the organization can gain more market share where they have expanded, it may be beneficial to attain additional financing to expand more rapidly.
Growth:
Sales growth have slowed since the organizations inception. It was stated in the case which led to the organization’s decision to expand their geographic area to attract new sales. Sales will increase during 2006-2007 with Brodie’s Industrial Supply expanding their geographic region. Total assets have jumped significantly reflecting the switch from renting their facility to purchasing and expanding the facility/warehouse. Total assets for 2006-2007 will drop as the organization is only expanding their facility instead of purchasing in the previous year. This was also reflected in the large change in Total Assets. While
Sales growth after 2000 were only 9%, which the average annual sale growth rates range from 10% to 30% in their industry. The lack of cash is explained by the current liquidity ratio
From 2010 to 2011 there has been a 23.8% increase in gross fixed assets value. The raised funds through long term debts would have been used to enhance assets base of Speedster. This is a very positive sigh of future profitability and capacity of the company. Higher assets should be able to generate more cash inflow...
Televisory analysed and compared the results of September 2015 quarter with September 2016 quarter. The EBITDA per square foot decreased by 6.8% from USD 12.56 to USD 11.70 as can be seen from the below EBITDA bridge. This decline was still better than the sharp decline at a CAGR of 8.8% over the past 5 years. However, the EBITDA per square foot decreased, the revenue per square foot increased by USD 9.60. The chart beneath shows that the average number of employees per store has increased. This will result in a better customer experience. The inventory turnover period improved from 103 days to 95 days. The below chart depicts that the average revenue per store has also improved. This shows that Finish Line rightly identified the underperforming stores. This, in turn, also improved the cash conversion cycle from 72.1 days to 57.1 days. The EBITDA margin decreased, however, this decrease would have been more if the underperforming stores were still
MCI current capital structure is x% debt and y% equity. Their key ratios are a, b, and c. Comparing to other firms in the utilities industry they appear to be underutilizing (debt/equity). (See exhibit D). Referencing the forecast there is expected to b...
Looking at the individual ratios seen in exhibit 1 and comparing it to the industry average shown in exhibit 2 gives a sense of where this company stands. Current ratio and quick ratio are really low and have been decreasing. For 1995, the current ratio is 1.15:1, which is less than the industry average of 1.60:1, however to give a better sense of where this stands in the industry, as seen in exhibit 3, it is actually less than the average of the bottom 25% of the industry. The quick ratio is 0.61 is less than the industry is 0.90. Both these ratios serve to point out the lack of cash in this company. The cash flow has been decreasing because, it takes longer to get the money from customers, but the company still needs to pay for its purchases. Also, the company couldn’t go over the $400,000 loan limit, so they were forced to stretch their cash.
The industrial supply industry generates about 73 billion dollars in revenue and has a growth rate of 4.4% a year and employees about 95,000 people according to IBIS World. The interesting part of this industry is the fact there is no company with a dominant market share. Even though some revenue numbers might be higher for some companies, each company
Maxx benefits from chaos by picking up the pieces, merchandise at a discount, when other retail stores close, or have overruns, or unexpected changes in demand and in return pass these savings on to their customers who shop for value (Levine-Weinberg, 2016) This is the demand-side benefits of scale when the consumer rather pay less for name brand merchandise than to pay more for the same designer in the department store. The stores that where having difficulty in the retail market left themselves vulnerable by not defending their position and T.J. Maxx proactively attacks this opportunity with its purchasing power and passes the savings to its customers. This proactive process of attacking and defending is what Wee (2016) calls the holistic and balanced perspective of handling competition. Moreover, this business warfare strategy of attacking struggling competitors is called offensive marketing warfare strategy (Grewal, 2014).
Per Kalogeropoulos (2016), the company is better able to ensure product availability while managing their costs because of their latest logistics initiative. They have recently created a network of deployment centers that reduces the time between when the product leaves a supplier to when it hits the shelf at the Home Depot store which drives profits higher. Parnell (2014), relays that companies who use low-cost strategy seek distribution channels that minimize cost. Home Depot’s new logistics initiative provides the company with economies of scale and a market advantage because it adds to their low-cost
1. Context: In early September’08 Giant Consumer Products, Inc. (GCP) realized that Frozen food division, which had been growing at 2.8% (compounded annual growth) rate since 2003 to 2007 and accounted for almost 33% of GCP’s overall business volume, is not doing well now. The sales as well revenue volume is around 3.9% behind the target. Most specifically marketing margin (key parameter for GCP business) was also under plan by 4.1%. GCP had been doing well in wall-street but performance of past couple of quarters has increased the worries of GCP i.e. whether GCP will able to maintain its profitable growth.
Another correlation between the management’s discussion within Fords 10-k and the financial analysis within this essay is Ford’s market expansion into the Pacific Asia Africa segment (SEC, 2015). Because ford is entering into new markets, their costs are increasing for selling and administration. The costs include hiring new salespeople and promoting their new products in new market segments. Thus causing the increase of selling and administrate costs in the horizontal income statement analysis. Furthermore, Ford’s fixed assets are also increasing because they are investing in new land and equipment to manufacture their new
As for the second issue, it seems that Costco’s efforts to become an international company are moving slowly. They have not reached a point where their US and Canadian warehouses provide a backbone for their finances. Costco’s third issue is their expenses, which include merchandising costs and pre-opening expenses, have been increasing steadily and they need to balance this out to keep a positive net income. Analysis: Key Issue #1: Costco has many competitors, with the primary two being Sam’s Club, a wholesale business managed by Walmart, and BJ’s wholesale club. Sam’s Club offers the same services as Costco.
The benefits of these assumptions are that while maintaining the current growth rate of 13%; we can maintain our COGS. One of the major factors contributing to the firm’s poor profit margin is operating expenses.
Historically, Dollar General operated in a highly price sensitive market segment, with 55% of its consumer base earning an average annual gross income of less than $40,000.[2] To attract these customers, Dollar General employed an Everyday Low Price strategy similar to Wal-Mart’s. Thus, keeping costs low and driving high traffic volumes were critical to the company’s financial success. Dollar General achieved this strategy in several ways, including keeping rents and labor costs low, locating in low-income, high traffic areas that offered consumers few substitutes, and offering a wide variety of popular CPG and white label goods.
The key issues for K-Mart strategies are finding the right cost level for an opportunity to be aggressive, and differentiating the product for consumer in terms of different consumer and different intangible product attributes. K-Mart and Sears should be combined with a new overall corporate competitive strategy using a cost focus. This may turn out to be the only sensible strategy, and the one which best describes the strategy adopted. Strategies of cost leadership and product differentiation are often described as if they were mutually exclusive you can either pursue one or the other, but not both.
Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.