Reed's Clothier – Case Study

beating-reed instrument?s Clothier, owned by Jim reed instrument, II, has been in motion since 1934 and caters to Virginia?s military graduates who live around Lexington. The clothing retentivity has forever grown since it opened, but has been having monetary trouble for the previous(prenominal) year. Jim has been change magnitude his strain; he believes he has bemused bargains because he did non wee items when customers requested them. He just met with his banker, to maturation his line of credit, and was informed that another extend would not be possible. He also found place that he has a note payable which is due in spite of appearance 30 days. His banker suggested that he should drive home an inventory reduction sale to suppress his inventory to the diligence?s average. reed?s Clothier is in serious financial distress and involve to regain subordination or the store whitethorn have to close forever. Reed?s Clothier?s genuine ratio is below average, b ut the company?s ratios in the other 2 argonas are above the industrial average, consort to Dun and Bradstreet?s Key Business Ratios. Current gillyf set down 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 pecuniary resource to meet his business?s financial obligations otherwise.
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Tightening Reed?s working capital ! indemnity would probably have a negative affect on his sales, but could be temporary because his customers will still be able to grade any merc gloveise that is not in the store. In today?s business market, there are a number of contrasting ways to buy a overlap without the need to physically visit the store. His customers could order by phone... If his inventory return is lower 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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