Reitman’s Financial Analysis Essay

Reitmans Financial Analysis From an analysis of the companys ratios everyplace the last three years since 2009, as entrap in the Appendix Exhibit _, the quantitative data reveals an un complimentary abridge in performance. Liquidity Reitmans has the strongest current ratio when compared to its competitorsThe porta and Le Chateauat most double their value. However, the Companys ratio has been in step-down since 2009 at that time, it was at 4. , then fell to 4. 3, and finally, to 4. 1 in 2011. This slue reveals a slight decline in Reitmans short-term liquidity however, correct with the decline, the Company has more than enough liquidity to meet their short-term cash requirements. It could even be argued that they are non utilizing their assets to their full potential, as the commonplace acceptable current ratio is 21.Even when inventory is not considered, as with the quick ratio and cash ratio, Reitmans ratios are unusually amply when compared to their competitorswhich add s strength to the argument that they are not utilizing their assets as effectively as they could be if they were to invest their funds instead of leaving them sitting light(a) within an account. Asset Management As revealed by their inventory dis ensnare of 1. 2, Reitmans sells its inventory more slowly than its competitor, the Gap, does with their ratio of 5. 7 in 2011.However, the Gap may have a higher than normal turnover, as Reitmans is favourable when compared to their other competitor, Le Chateau. The Companys accounts receivable turnover has remained comparatively stable over the past three years, fluctuating slightly scarcely still taking just one day on comely to collect from customers. In contrast, Reitmans accounts payable turnover has been experiencing an unfavourable decline since 2009 it utilize to take just 106 days to make payments to suppliers, but now it takes 257 days, over twice the time.Long-term Debt Paying Ability Reitmans debt ratio measures the extent o f creditor funding and leverage. Their percentage of debt, 22%, is much smaller than their competitors at 63% and 39% and a result, Reitmans is much more solvent and more able to hold back their long-run financial viability. Further, when looking at the Companys multiplication occupy elucidateed, we see that Reitmans is considered to be less-risky for lenders as they are able to earn their fixed interest charges ver 3 times per year this exceeds the general road map that says creditors are reasonably safe if the company has a times interest earned ratio of two or more times. Profitability approximately merchandising companies need sufficient gross profit in order to cover their operating expenses or else they will likely fail. Reitmans, as standardised to their competitors, maintains a higher profit ratio of 64% in 2011 and 67% in 2010. Even though the Companys other measures of profitableness are still favourable compared with their competitors, Reitmans profitability ratios have declined by almost half from 2010 to 2011.