Financial ratios

In the meantime, BABY is also expanding s existing stores. To achieve the goal of expansion, potential customers should be fully informed. However, a simple “ word of mouth” advertising strategy is not effective enough. Approaches such as television advertising, direct-mail advertising and broadcast advertising should be added to the existing strategy.

Ere “ promotion from within” policy of operation strategy is not entirely consistent Ninth the expansion strategy. Although the policy leads to a low turnover in the management ranks, the depth of the management is concerned.

The table below shows Buys advantages over specific competitors. Bobby’s advantage Every-day low prices Premium customer service No warehouse Superstore format Nor mouth advertising Lease of store sites Estrous Lechers b) Assess Buys current performance. Evaluate the keys to its current success. How has the important performance measures changed over time? How does BABY compare to its competitors? What is driving Buys superior ROE? How sustainable are Buys current ROE and growth rate? Nee calculated these ratios.

Sales Net Income Net Income/Sales (%) *Sales/Average Assets *Bag.

Quick ratio for the year 1993 of 0. 097 was a ‘ arrant of the current ratio. The ratio, compared to last year, was small which might be caused by the strategy of expansion. Liabilities-to-equity Ratio of the year 1993 of 0. 364 implied BABY was a relatively solvent company. The increase of the ratio showed that BABY became more reliant on creditor financing with equity financing.

Ere superior ROE of BABY in 1993 lay on its outstanding profit margin and asset turnover ratio. For three main reasons, BABY was able to earn high profit margin despite implement every-day low price strategy.