Reed's Clothier – Case Study

beating-reed instrument?s Clothier, owned by Jim vibrating reed, II, has been in accomplishment since 1934 and caters to Virginia?s military graduates who live around Lexington. The clothing storage has forever grown since it opened, but has been having monetary trouble for the knightly year. Jim has been change magnitude his strain; he believes he has woolly-headed sales because he did non ache items when customers requested them. He just met with his banker, to maturation his line of credit, and was informed that another out(a)growth would not be possible. He also found out that he has a note payable which is due inwardly 30 days. His banker suggested that he should turn out an inventory reduction sale to quail his inventory to the diligence?s average. reed?s Clothier is in serious financial distress and require to regain subordination or the store may have to close forever. Reed?s Clothier?s menstruation ratio is below average, but the company?s rat ios in the other 2 argonas are above the industrial average, harmonize to Dun and Bradstreet?s Key Business Ratios. Current pedigree Return onRatio overturn EquityReed?s Clothier 2.7 7.0 25.9Industrial Average 3.1 4.6 9.1Harold Holmes, Reed?s banker, suggested that he should have an inventory sale to reduce his inventory to the industry?s average. Holmes thought that Reed?s sales would be reduced by less than 5 percent every year and that Reed may not be able to pull ahead the necessary bullion to meet his business?s financial obligations otherwise.

Tightening Reed?s working ca pital indemnity would probably have a negat! ive affect on his sales, but could be temporary because his customers will still be able to arrangement any merc gloveise that is not in the store. In today?s business market, there are a number of diametric ways to buy a ware without the need to physically visit the store. His customers could order by phone... If his inventory return is unhorse than industry average he may have a problem with stocking the correct inventory. His command of losing sales due to not having stock on hand may back this up. It may be an idea to flavor at marketing and product mix as well If you take to get a full essay, order it on our website: OrderCustomPaper.com

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