Fannie Mae

The reeds clothier story is a grim situation to what can happen to many sm on the whole businesses. This benignant of thing happens not because of ineptness of the employees, but because of a stamp of the way to make money is to spend money. The fact that all the financial trans follow throughs are c overed under the screening of The Good Old Boy Network, is a chemical formula for disaster for Jim vibrating reed II. He has arrived at this problem purely because of his fathers business dealings, and when he took the company over he settled on the mentality of This is how weve always through it. The unexpected turn of Harold Holmes taking over the reeds Clothier consider is what shines the light on Jims poor accounting practices. This action didnt create the problems, but rather just brought them into the limelight. The answers to the down the stairs questions outline where the problems are, and how to fix them.

1. Calculate a few ratios and analyze Reeds results with industry averages. (Some industry averages are shown in Exhibit 4.) What do these ratios indicate?

2. Why does Holmes want Reeds to have an stemma reduction sale, and what does he hypothecate will be accomplished by it?

3. Jim Reed had adopt a very loose functional capital form _or_ system of government with higher current assets than industry averages.



If he merely tightens his working capital policy to the averages, should this affect his gross sales?

4. Assuming that Reeds can improve its operations to be in line with the industry averages, construct a 1995 pro forma income statement. tackle that ne sales will be reduced 5 percent to $1,938,000 but that depreciation and amortization will not change but remain at $32,000.

5. What type of inventory control system would you suggest to Jim Reed?

6. What type of accounts due control would you suggest to Jim Reed?

7. Is the increase in sales related to the increase in inventory? (See Exhibit 5.)

8. What is Reeds cost of not taking the suppliers discounts?If you want to desexualize a full essay, order it on our website: Ordercustompaper.com



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