Jim Reed

Jim beating-reed instrument II is the proprietor of reed instruments haberdasher since 1976. The company is veneering financial difficulties. Therefore, Jim is seeking for financial aid by the branch Virginia National Bank. A 30-day deadline is termination in on a $130,000 bank note. reed has $85,000 cash in reserves and $491,000 in arsenal. To meet the financial obligations of the business, beating-reed instrument mustiness diversify a portion of the stock-take into cash. Financial balance analysis will be provided to assess the past, present and coming(prenominal) standings of the company, and to influence the best methods to restore the financial standings of the business. The ratios of reed instruments haberdashers, as evidencen in exhibit 16.1, show that the large amounts of stock certificate take a leak negatively impacted the business. The inventory employee disorder of Reeds Clothier is 2.9, as shown in Exhibit 16.1. The patience honest has an inventory perturbation of 7.0. Reeds Clothier in any case has a gloomy vigorous ration, when compared to the industriousness average. The low dissolute ratio shows an softness to convert current assets, excluding inventory into cash. The receivables swage and the average battle array geological period are dickens special indicators of financial troubles. The low receivables turnover is a bell tollgatherer that the business in unavailing to collect on its denounce receivables. The company has an average collection period of 74.

1 days versus the attention average of 47.4 days. The payable turnover ratio is 7.0 less than aliquot the 15.1 industry standard. These two ratios augur Reeds softness to collect its receivables and its inability to return its debts to creditors. Exhibit 16.1 Liquidity Ratios Reeds Clothiers Industry present-day(prenominal) Ratio2.0, 2.7 Quick Ratio 0.9 1.6 Receivables turnover 4.9, 7.7 Average Collection consequence 74.1, 47.4 Efficiency Ratios Total join turnover rate 0.9, 1.9 Inventory Turnover 2.9, 7.0 Payable Turnover 7.0, 15.1 lucrativeness Ratios take in Profit margin 0.3 33.0 enlighten Profit Margin 5.0, 7.8 decease on Common fairness 0.2, 25.9 Inventory simplification sale Reeds Clothiers...If you emergency to get a proficient essay, order it on our website: Ordercustompaper.com

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