- The Following Is Common Sizes Balance Sheet And Income Statement For A Company Specialized In Fashion Retailing The Com 1 (179.67 KiB) Viewed 11 times
the decrease in inventory turnover is an indication of what?
Provide evidence to your answer.
The following is common sizes balance sheet and income statement for a company specialized in fashion retailing, the company owns several brand names in clothing and fashion. Common Size Balance sheet Year 4 Year 5 Year 6 Year 7 Assets Cash 2.9% 17.6% 3.8% Marketable securities 4.1% 0.0% 13.5% 0.0% 0.0% 5.0% Accounts receivable 15.2% 0.8% 0.8% Inventories 9.4% 10.3% 10.2% 14.4% Prepayments 1.7% 1.3% 2.9% 1.4% 28.4% Total current assets Fixed assets 30.1% 29.9% 26.9% 68.4% 66.0% 62.4% 61.9% 3.2% 3.9% 7.7% 9.2% Other assets (including intangibles) Total Assets 100% 100% 100% 100% Liabilities and Shareholders' equity Accounts payable 3.2% 3.2% 3.0% 3.8% Short term borrowing 0.2% 0.0% 0.0% 0.3% 5.9% 4.6% 7.4% Other current liabilities 5.6% Total current liabilities 9.0% 9.4% 7.6% 11.1% Long term debt 55.4% 53.7% 50.7% 57.4% Other noncurrent liabilities 4.3% 7.0% 4.3% 7.0% 0.0% 0.5% 0.8% Minority interest 0.0% Total liabilities 68.8% 67.4% 65.8% 76.4% Common stock 2.2% 1.9% 2.2% Additional paid in capital 2.4% 1.7% 1.6% 1.5% 1.8% 30.7% 32.1% 34.2% 43.3% Retained earnings Treasury stock 3.5% 3.3% 3.4% 23.6% Total equity 31.2% 32.6% 34.2% 23.6% Total liabilities and Shareholders' equity 100% 100% 100% 100% Income Statement Year 6 Year 7 Year 5 100% 100% Sales 100% Other revenues 0.2% 0.3% 0.5% Cost of goods sold 67.1% 69.5% 66.4% Selling and administrative expenses 18.0% 18.7% 21.4% Interest expenses 4.9% 4.9% 5.6% Income tax expenses Minority interest 4.0% 2.8% 2.8% 0.0% 0.3% 0.5% 6.1% 4.0% 3.8% Net income The following are financial ratios for the company. You are required to answer the following questions. Year 5 Year 6 Year 7 ROA 2.87% 2.60% 4.13% Profit Margin 3.2% 2.9% 3.1% Assets Turnover 0.90 0.88 0.99 Accounts receivable Turnover 6.2 11.5 118.4 Inventory Turnover 6.1 6.0 5.8 Fixed Assets Turnover 1.3. 1.4 1.5 collection period 58.6 31.7 3.1 inventory period 59.6 60.9 62.5 %change in sales 7.66% 9.68%