Reference no: EM133222105

Assignment:

1. Describe the relationship of assets, liabilities, and net worth for a retailer. How is a balance sheet useful in examining these items?

2. A retailer has net sales of $1,000,000, net profit of $185,000, total assets of $600,000, and a net worth of $225,000.

A.) Calculate net profit margin, asset turnover, and return on assets.

B.) Compute financial leverage and return on net worth.

C.) Evaluate the financial performance of this retailer.

3. How can a convenience store increase its asset turnover?

4. Is too low a financial leverage ratio good or bad? Why?

5. Differentiate between an IPO and an LBO.

6. Present five recommendations for retailers to improve their accounting and financial reporting practices with regard to disclosure ("transparency") of all relevant information to stockholders and others.

7. What is zero-based budgeting? Why do most retailers utilize incremental budgeting, despite its limitations?

8. What is the value of a percentage profit-and-loss statement? The disadvantage?

9. How could a seasonal retailer improve its cash flow during periods when it must buy goods for future selling periods?

10. Distinguish between capital spending and operating costs. Why is this distinction important to retailers?

11. What factors should retailers consider when assessing opportunity costs?

Reference:

Berman, B. & Evans, J. (2017). Retail Management: A Strategic Approach. Boston: Pearson. Thirteenth Edition.