Cabela’s experienced a large decrease of 30% in accounts receivable in 2009 before a 48% increase in 2010. Recently in 2014 they have seen a 45% increase in their accounts receivables. The accounts receivable turnover ratio is used to calculate how efficiently a firm uses its assets. As Cabela’s has grown, so has its accounts receivable turnover ratio. From 2005-2014 Cabela’s AR turnover ratio has increased 154.89%, largely due to their expansion over the 10 year period. Cabela’s Days Sales Outstanding ratio has seen a large decrease over the 10 year period. From 2005-2014 their DSO ratio has decreased 60%, meaning that Cabela’s now collects revenue from its sales at a much faster rate. Cabela’s AR change to overall sales change ratio saw …show more content…
Their % change in A/R/Overall % change is sales ratio shows a sharp decrease starting in 2005 till 2009 where it reached a low of -19.25%. This could be attributable to the recession in which the company could have been experiencing a lower amount of accounts receivable to sales during that time frame. Dick’s currently has an AR turnover ratio of 102.7x. This has increased over the period by 66.18%, which indicates that they have become better collecting their accounts receivable over the period. In negative correlation, their DSO (Day Sales Outstanding) ratio has decreased over the period by 40.68% down to 3.5 days. This is an excellent DSO, meaning that it only takes them 4 days on average to collect their accounts receivable.
Big 5 Sporting
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This means that it is taking them a lot longer to collect their debts on that credit. This lower number can mean that Big 5’s collection process has become worse or has sold to customers with financial difficulties. The Overall Days Outstanding ratio has increased 48.39% over the 10 year period. It averaged a 2.6x DSO (Day Sales Outstanding) in 2005 and averaged a 4.3x DSO in 2014. This means that it is taking them almost 2 extra days on average to collect their accounts
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
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 operating. Source: Televisory’s Research Source: Televisory’s Research. Source: Televisory’s Research. Source: Televisory’s Research.
Bass Pro shop started as an 8-foot-long display area in the back of a liquor store in 1971 and has expanded into a Fortune 500 company that employs over 8,800 employees and has annual sales estimating somewhere around $1.25 billion today. The question at hand is: should Bass Pro Shops continue to expand, and if so at what rate should they? The primary problems they might face when expanding are as follows. Could expansion hurt their brand image and if so how? The Competition outside of Missouri is going to be much greater. They will not have the publicity and brand recognition as they do in Missouri. Does Bass Pro have the financial resources in order to open new stores, if not then what are some options they can exercise? Will Negative publicity threaten their brand image as they continue to grow? Is the cost of overhead going to be too high initially for Bass Pro to expand at a fast rate, if so then at what rate should they expand yearly? These are all problems Bass Pro is going to have to face in the future. Through research and extensive problem solving, they will be able to make an accurate decision on rather they should expand.
Inventory turnover of Costco is 11.7. Therefore, days inventory (DIO) is 31 days when dividing 365 days by 11.7. Average receivables period (DPO) is 3 and average payable period (DSO) is 33. DIO plus DSO minus DPO is 1 meaning there is only one day gap. This simply tells her that the company is performing well.
Analyzing Wal-Mart's annual report provides a positive outlook on Wal-Mart's financial health. Given the specific ratios and its comparison to other companies in the same industry, Wal-Mart is leading and more than likely continue its dominance. Though Wal-Mart did not lead in all numbers, its leadership and strong presence of the market cements the ongoing success. The review of the current ratio, quick ratio, inventory turnover ratio, debt ratio, net profit margin ratio, ROI, ROE, and P/E ratio all indicate an upbeat future for the company. The current ratio, which is defined as current assets divided by current liabilities, is a measure of how much liabilities a company has compared to its assets. Wal-Mart in the year of 2007 had a current ratio of .90, and as of January 2008 it had a current ratio of .81. The quick ratio, which is defined as current assets minus inventory divided by current liabilities, is a measure of a company's ability pay short term obligations. Wal-Mart in the year of 2007 had a quick ratio of .25, and as of January 2008 it had a ratio of .21. Both the current ratio and quick ratio are a measure of liquidity. Wal-Mart is not as liquid as its competitors such as Costco or Family Dollar Stores Inc. I believe the reason why Wal-Mart is not too liquid is because they are heavily investing their profits for expansion and growth. Management claims in their financial report that holding their liquid reserves in other currencies have helped Wal-Mart hedge against inflationary pressures of the US dollar. The next ratio to look at is the inventory ratio which is defined as the cost of sales divided by average inventory. In the year of 2007, Wal-Mart’s inventory ratio was 7.68, and as of January 2008 it was 7.96. Wal-Mart has a lot of sales therefore it doesn’t have too much a problem of holding too much inventory. Its competitors have similar ratios though they don’t have as much sales as Wal-Mart. Wal-Mart’s ability to sell at lower prices for same quality, gives them the edge against its competition. As of the year 2007, Wal-Mart had a debt ratio of .58, and as of January 2008, it had a debt ratio of .59. The debt ratio is calculated by dividing the total debt by its total assets. Wal-Mart has a lot more assets than it does debt so Wal-Mart is not overleveraged.
.... In addition, inventory turnover shows a consistent increase from 2.16 in 2011 to 2.38 and 2.49 for 2012 and 2013 respectively.
Return on sales is decreasing and is below the industry average, but the goods news is that sales and profits have been increasing each year. However, costs of goods are increasing and more inventory is left over each year causing the return on sales to decrease. For 1995, it was 1.7% which is less than the average of 2.44% but is a lot higher than the bottom 25% of companies as seen in exhibit 3, which actually have negative sales return of 0.7%. Return on equity is increasing each year and at a higher rate than industry average. In 1995, it was 20.7%, greater than the average of 18.25% and close to the highest companies in exhibit 3, of 22.1% showing that the return in investment in the company is increasing, which is good for the owner.
The return on total assets (ROA) is an overall measure of profitability which measures the total effectiveness of management in generating profits with its available assets. This ratio indicates the amount of net income generated by each dollar invested in assets. The higher the firm's return on total assets, the better. Harley Davidson's return on total assets was 14.04% for 2001, 14.27% for 2000. These percentages are high and show an upward trend, this shows strong performance in this area for the past two years.
Assets turnover growth is impressive considering other competitors in the industry have closed many stores from losses caused by Amazon market share growth and Costco and Walmart low prices.
When analyzing Apple’s Accounts Receivable Turnover Ratio, the ratio is lower than the average industry. The ratio shows 11.96 times in account receivable collections during the year and how efficiently Apple uses its assets (Miller-Nobles, Mattison and Matsumura 781-782). Account receivable collections will increase after the release of the iPhone 6 and iPhone 6Plus by mid-September. Therefore, increasing the ratios of account receivable turnover and inventory turnover.
As an Omni-channel retailer, Cabela’s customers have full access to the company’s global inventory. Customers can shop in-store and have their order shipped to the location of their choice. Customers can also shop online and choose to collect their order at a store of their choosing. To maximize product availability, Cabela’s distribution network allows any one of its seventy-one stores and three distribution centers to fulfill customer orders via direct shipment.
In a declining economy with declining sales, how has Cabela’s managed to maintain its competitive advantage? Cabela’s has maintained its competitive advantage through its use of Human Capital (HC) and the use of Organizational Citizenship Behavior (OCB). Some factors that have led to Cabela’s competitive advantage are its customer service policies, the quality of the equipment they sell, and the ease with which a customer can order items (via in-store, mail order, and online).
The competitors are around 0.5 for their cash flow adequacy ratio, which isn’t good, but when you compare it to Kodak, they are doing much better in handling their business obligations. Management Efficiency Eastman Kodak has a low accounts receivable turnover ratio. In 2014 it was 3.95. The low ratio signifies that Kodak might have a poor collecting process and should consider changing it.
Its receivable turnover is 13.4 times per year, which is higher than C-P 10.5. In addition, the average number of days from sale on account to collection for P&G is 27.2 days while for C-P is 34.8 days. Based on the efficiency ratio analysis, P&G’s inventory moves quickly from purchase to sale, which the inventory turnover ratio is 6.2 and the time for the purchased inventories to be on sale is on the average of 58.6 days while C-P’s turnover ratio is 5.2 and the average days to sell is 70.6. This shows that P&G takes a shorter time than C-P to sell their inventories. However, C-P has a higher ability to pay their short-term liabilities, whereby the current ratio is 1.08 as opposed to P&G
This bar graph is showing that the trend is sporadic from year to year. This ratio shows the company’s total sales that are available for financing and supporting the company’s ongoing operations. Large ratios are needed to show that the company is in a better place to develop than its rivals. Kraft Food Group has room to grow in this