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Report on the Financial Strengths and Weaknesses of Arapahoe

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Report on the Financial Strengths and Weaknesses of Arapahoe-Goldstein Supermarkets, Inc.
Adaptation is essential to survival. Humans as a species share this primal knowledge of Social Darwinism and have applied it fittingly to our societal interactions and business endeavors. People, as well as companies are subject to its whims and as such must either adapt or fail. However, a company cannot know its standing or how to better its chances of survival in a cutthroat, profit-oriented business world without a thorough understanding of its own abilities and evolutionary advantages (or lack thereof). Therefore, it is necessary to periodically analyze the financial strengths and weaknesses of a company in order to ensure that it is doing …show more content…

An ad campaign or promotions may increase sales and the retiring of any unnecessary assets could decrease average total assets. If you are able to accomplish either of these, then your Total Asset Turnover and resultantly your ROA will increase. In this analysis of profitability, it is also worth mentioning a ratio known as Accounts Receivable Turnover. This ratio represents the number of times accounts receivables turnover in a year, or rather how often the company collects on credit. Your accounts receivable turnover ratio was 466.67 in 2009 and 570.00 in 2010 compared with industry norms of 101.6 and 92.8 respectively. Due to the quick turnover of accounts receivable (also partially due to the fact that many transactions are in cash), your company may not be earning as much interest as it has the potential to. One way of solving this issue would be to lower the speed at which you collect on accounts (which you may have to take up with third-party credit collectors), thereby increasing interest revenue and profitability. In summary, your company has increased profitability significantly over the previous two years, but must continue to increase it in order to stay competitive by either raising prices, increasing sales, decreasing average total assets, or slowing credit collection. The second facet of a company to analyze in

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