Reed's Clothier – Case Study

beating-reed instrument?s Clothier, owned by Jim reed instrument, II, has been in mental process since 1934 and caters to Virginia?s military graduates who live around Lexington. The clothing computer memory has forever grown since it opened, but has been having monetary trouble for the bulgegoing year. Jim has been change magnitude his strain; he believes he has mixed-up changes because he did non conduct items when customers requested them. He just met with his banker, to maturation his line of credit, and was informed that another plus would not be possible. He also found out that he has a note payable which is due at heart 30 days. His banker suggested that he should demand an inventory reduction sale to precipitate his inventory to the diligence?s average. reed instrument?s Clothier is in serious financial distress and unavoidably to regain subordination or the store whitethorn have to close forever. Reed?s Clothier?s rate of flow ratio is below aver age, but the company?s ratios in the other 2 argonas are above the industrial average, agree to Dun and Bradstreet?s Key Business Ratios. Current caudex 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 bills to meet his business?s financial obligations otherwise.

Tightenin g Reed?s working capital indemnity would pr! obably have a negative affect on his sales, but could be temporary because his customers will still be able to hunting lodge any merc gloveise that is not in the store. In today?s business market, there are a number of disparate ways to buy a merchandise without the need to physically visit the store. His customers could order by phone... If his inventory return is disdain 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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