There are many factors that can affect a company's overall profit and performance, some of which are beyond the control of the company. In the case of Fossil Corp., we will be focusing on the major external factors that may have caused the company's actual revenue and growth to differ materially from the expected future figures. Economic Conditions Economic Cycles: The retail market is a highly elastic sector and as such is affected by current economic conditions. Since Fossil Corp. is in the retail market, they will find that differing fluctuation in their gross profits are directly dependant on the current economic cycle. If the economy is weak, demand for their product will decrease and purchases of their products will decline as the …show more content…
If any of these external factors become a significant problem Fossil. Corp. will not be able to meet with the demand of their product. A good example of this is the winter storm that currently engulfed China, costing the country billions of dollars in losses and creating extensive physical damage. This storm most likely had a direct effect on Fossil Corp. supply chain and thousands of other companies who also manufacture from China. **********straight from the pdf******* We extend unsecured credit to our customers and are therefore vulnerable to any financial difficulties they may face. We sell our merchandise primarily to department stores and specialty retail stores in over 90 countries worldwide. We extend credit based on an evaluation of each customer's financial condition, usually without requiring collateral. Should any of our larger customers experience financial difficulties, we could curtail business with such customers or assume more credit risk relating to such customers' receivables. Our inability to collect on our trade accounts receivable relating to such customers could have a material adverse effect on the amount of revenues that we receive and our results of operations. We do not maintain long-term contracts with our customers and are unable to control their purchasing decisions. We do not maintain long-term purchasing contracts with our customers and therefore have no contractual leverage
* Where difficult customer behaviour may arise and where it would be considered a risk
To consider this we need net credit sales and average receivable balance. This ratio indicates average collection period should be consistent with corporate credit policy. An increase suggests a decline in financial health of customers.
| Not being able to respond to consumer wants/demands quickly enough, leading to short-term revenue loss
Is that make loans or buy bonds with long maturities are relatively more exposed to credit risk. Foreign exchange risk, is the risk that exchange rate changes can affect the value of an FI’s assets and liabilities denominated in foreign currencies. FIs can reduce risk through domestic-foreign activity. Liquidity risk, is the risk that a sudden and unexpected increase in liability withdrawals may require an FI to liquidate assets in a very short period of time and at low prices. Can be day-to-day withdrawals by liability holders are generally predictable. And are usually large withdrawals by liability holders can create liquidity
could occur. This will cover not just direct financial loss, but many other issues, such as loss of customer
As with any financial information collected we need to ensure that the customers information is kept safe and secure and the information we gather follow the proper collection regulations. We need to disclose to the customer the ways we intend to use the information, such as running credit checks or opening lines of credit. Prior to the customer submitting any information we need to ensure that we disclose this information.
b. Other indications of financial difficulties (default on loan or similar agreements, arrearages in dividends, denial of usual trade credit from suppliers, restructuring of debt, noncompliance with statutory capital requirements, the need to seek new sources or methods of financing, or the need to dispose of substantial assets).
In this segment, the retailer J.C. Penney will be analyzed against the department store retail industry, with particular emphasis placed upon their competitors, Macy’s and Kohl’s. The major components to be discussed will include the general external environment (i.e. demographics, economics, politics, legal requirements, technologies and global expansion), the industry environment, the competitive environment, the driving forces and the key factors for success within the industry. In terms of the general external environment, the retail industry is a multi-trillion dollar business in the United States alone and maintains operations primarily due to consumer spending. Such purchases rely upon the disposable income of
Nordstrom’s profitability demonstrates similar results as compared to competing companies, however, indicates positive future performance. From 2014 to 2015, Nordstrom’s income decreased by $120 million as a result of increased cost of goods sold and administrative expenses. The retailer continues to invest heavily in online technologies and order fulfillment, however, it has minimal improvement up to this point. In addition, Nordstrom’s growth-oriented investments in expansion of its Nordstrom Rack stores and entrance to the Canadian market has greatly increased its heavy capital expenditures for the year. Consequently, Nordstrom’s ability to generate profit from investment in sales faltered as its return on assets decreased by .8%. The retail
LVMH has a wide range of consumers from different backgrounds. It is imperative that they are aware of religion, race, culture, and buying habits in every country. For instance, worldwide people are more dependent on the Internet, signifying that the methods of how people purchase goods are changing.
Limited bargaining leverage helps Lululemon Athletica, which have a short-term positive impact on this entity, which adds to its value. "Large number of customers (Lululemon Athletica)" is a difficult qualitative factor to defend, so competing institutions will have an easy time overcoming it.
To determine the proportion of allowable amount on a customer, the company checks the number of days the debt has been pending before payment. Equally, financial conditions of the customers, macroeconomic factors and the weighted-average risk trend trends are considered.
To increase sales a company may relax their credit polices “review the relationship between sales and receivables to determine if receivables are increasing more rapidly than sales” (Schroeder, Clark, &Cathey, 2009, p. 158).
The core problem for Allen Distribution Company is how to distinguish from the marginal accounts the difference between good creditors and bad creditors. Especially we show how the difference between creditors can be utilized in practice by the credit representatives. For this we provide clear guidelines. The option of extending the Morse Photo Company’s $ 1000 credit line is used as test case for these purposes.
And the company is suffering from liquidity challenges because it is not in a position to finance its day-to-day activities, so its bank account stands over drawn. This situation has impacted negatively on the company's ability to repay its earlier loans and customers are upset because of delayed delivery.