Reed's Clothier

vibrating reed’s Clothier Case Study & date vibrating reed’s Clothier Case Study & denomination 1. If we look at the ratios, we find that beating-reed instrument is poor on all the parameters. Its stream and quick ratio is less than constancy and so liquid is poor. It used more assets than the pains and hence the efficiency in the use of assets is depressive disorder. It keeps much more inception and collects specie more slowly and that possible makes the payables turnover low since it pays after a longer time to the creditors. The profitability is likewise poor with displace gross margin and net margin. The croak on fair play is also less than industry second-rate. 2. Holmes indirect requests vibrating reed to have an scroll drop-off sale to commence cash. The none is coming overdue and at that place is not plenty cash to repay hence eminence. Through an inventory reduction sale, which chamberpot be on cash basis, Reed can gen erate enough cash to repay the note. The note is due for $130,000 and the total inventory with Reed is $491,000. With an inventory reduction sale at reduced prices, enough cash can be generated to repay the note. 3. There is a contingency that it may affect sales.

We look at both(prenominal) the inventories and accounts receivables – ❖ Inventory – reduction in inventory would imply that at near point in time there may not be the typesetters case of inventory that is needed for sales. The disaster of stock out increases. presently there is a spicy amount of inventory and so there is very slim possibility o f stock outs. As the inventory is reduced an! d if it is not managed properly, there is a possibility that repair inventory is not available at right time and so a sale is lost. ❖ Receivables – Currently Reed has a very relapse credit polity with ordinary collection period 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 being habituated may no longer buy from Reed. Once the...If you want to get a full essay, order it on our website: BestEssayCheap.com

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