A low turnover implies excess inventory, a high ratio shows good sales. High inventory levels are unhealthy because they represent an investment with a rate of return of zero. In the case of copper mining there is a unlikelihood of a high ratio for inventory turnover because as it’s mined it goes out the door. The industry average is 41.66day for inventory turnover, Newmont is a faster turnover at 21 Days and Freeport is slightly longer at 52days. In the case of this industry specifically the faster they are able to turn over inventory the more money the company is able to free up allowing for a better working capital for the
1. Liquidity Ratios: This ratio used to measure the company's ability to pay off its short-term debts as they come due by using the company's current or quick assets, • Current ratio= current assets current liabilities AVP= 1.34 ULTA= 2.9 REVLON= 15.86 • Quick ratio = ( current assets - inventory) current liabilities AVON= .94 ULTA= 1.12 REVLON= 15.26 The safe rate for current ratio is 1 or up, that means the current assets can cover the current liabilities, we see that the current ratio for AVP is 1.34 which means it is it has ability to cover the current liabilities once they become due. Quick ratio refers to the company ability to use its cash or cash equivalent to pay its current liability without using its inventory, Avon Products company
All the changes are below 2%. It seems like all of Costco’s revenue comes with a fix percentage of costs and expenses. But there is something in the horizontal analysis that is really worth mentioning. From 2012 to 2015, Costco Wholesale Corporation’s total revenue increased by 17%, gross profit increased by 23%, and operating income increased by 31%. In 2012, Costco’s net income is $1.709 billion USD; then it is increased to $2.039 billion USD in 2013, $2.058 billion USD in 2014, and $2.377 billion USD in 2015.
Not only will it allow the company to continue growth as it has been, but it was estimated that they will see a 20% return from the initial campaign investment. To obtain the required funds for this to work, reducing the current excessive inventory levels of finished goods seems to be the simplest way to go about this approach. Speaking of inventory levels, as previously stated, their finished goods levels are much higher than they need to be. While a surplus of inventory is good in case of stock outs / fluctuating demand, in this case it costs the company more money to hold all this extra inventory, which could be used to allocate other resources such as the marketing campaign. Lastly, Brodie dealt with the data processing issue with EOQ, which caused them inaccurate forecasts of future productions.
Additionally, efficient distribution channels, optimal outsourcing and vertical integration, bargaining power to negotiate the lowest price for production inputs as well as high buying capacity all participate in making cost leadership a go-to strategy for high return on investment and profitability. The possible downsides of this strategy can vary from low workers remunerations to exploitation of unskilled workers. The advantages of cost leadership are often threaten by external business environment threats such as higher minimum wages laws. Examples of successful cost leadership organisations: WAL-MART.INC (ASDA), Costco, MCDONALD 'S, IKEA. Cost advantages stem from the fact that a company can quickly reap higher profit margins despite selling products or services at competitors price due to lower production costs.
Current ratio enables us to examine the liquidity of the business by equating the amount of current assets to current liabilities. Although current ratio fluctuates from industry to industry, is preferred to have at least one dollar of current assets for every dollar of current liabilities. Kohl's has the advantage over J.C Penney, as Kohl's current ratio is 1.87 in comparison to J.C. Penney?s ratio of 1.67. Kohl?s Corporation can pay all of its current liability and still have a positive working capital better than J.C.
This comparison Is used to indicate the period within which customers pay off their dues to the company. A low ratio indicates better performance since it implies that customers buy more of the inventory within a shorter period of time (Kimmel, Weygandt, & Kieso, 2016). A high figure implies that customers take long to buy hence inventory is held for longer periods before being bought. It is calculated as shown below: To calculate days in inventory, divide 365 days into the amount of annual cost of goods sold to arrive at sales per day, and then divide this figure into the total inventory for the extent period. Thus, the formula
Introduction One of the biggest challenges in managing medical practice is managing cash flow. In theory, it seems as simple as providing a service, then collecting the payment. In reality, however, bad planning, insurance documents, high abstracted patients and lack of employee training often create collection inefficiency and cause cash flow problems. Multi-hospital system over the past 30 years, multi-hospital systems including tax exemptions and for-profit organizations have developed much faster than independent hospitals. Assume that the multi-hospital system has several advantages, including: • Better access to the capital market, thereby reducing capital costs • Eliminate repetitive services, thereby increasing the remaining site 's
Workers that are a part of a union will generally receive $200 more per week than nonunion workers will. Although the increased pay raise is great it may come at a price to the employer. “The higher total compensation that union workers receive — $11.14 more per hour in September 2011, according to the federal labor statistics — is a cost to the company” (Douglas). This cost may lower a companies’ profit, but a union environment can offer an increase in productivity in workers. “According to the U.S. Department of Labor a 1997 report indicated that productivity in unionized workplaces was 10 percent higher than in comparable nonunion environments” (Joseph).
Hence, when it announces the acquisition, firm value may drop simply because investors conclude that the market is no longer growing. The acquisition in this case does not destroy value; it just signals the stagnant state of the market. Why do sellers earn higher return? Buying firms are typically larger than selling firms. In many mergers there are so much larger that even substantial net benefits would not show up clearly in the buyer’s share price.