West 49 Case Study

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Executive Summary To: Robert Giel From: Nitin Thakurani Date: April 3, 2008 Re: Credit Rating for West 49 Inc. Mr. Giel, Liquidity 1. Low Current Ratio of 1.24 and Acid Test Ratio of 31 cents $1. 2. Very High Accounts Receivable Turnover which is beneficial to the company. 3. Slight increase in Current Assets comprised of Cash & Cash equivalents from 2006 however still very low. Very Poor Liquidity Solvency 1. Concerns for such a high Debt. Ratio. 2. Times Interest Earned was 14.06 and that was a bright figure. Average Solvency however room for improvement Profitability 1) Return on Average common shareholders equity is a dreadful 6%. 2) Major concerns for Return on total assets, Profit Margin and…show more content…
West 49 is a retail store that is known for their surfing, snowboarding and mainly skateboarding apparel, equipment, footwear and accessories. Boardzone, Billabong, Off the Wall, Dukes Northshore are some of the names of stores that operate under West 49. There are 125 stores under the West 49 umbrella. The fiscal year 2007 seemed to be a promising year for West 49 with the opening of 20 stores. Not yet finished, 10 – 12 new stores are planned to be opened in 2008. The chief executive officer, Salvatore Baio, cares about West 49 and is completely devoted to the success of the…show more content…
West 49 is a determined company with a strong growth strategy which is to try to improve gross margin as a rate to net sales, improve profitability by lowering expenses and to drive continued growth in comparable store sales. West 49 is a company that is affected by the different seasons. Back to school sales and holiday season specials produce the most revenue for the company. The company strives on these times of the year because they generate the most revenue and keeps net sales high. West 49 has many risk factors. Competition is one of the many risks that affects West 49 because other companies can lower their prices and force West 49 to do the same and as result they would loose out on maximum profits. Economic Trends, Credit facilities and financial covenants, Human Resources, Dependence on Merchandisers and Foreign Merchandise Sourcing are some of the other risk factors that affect West 49.

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