Profit Margin for Ryan Boots

Profit Margin for Ryan Boots of 4.18% is less than the industry average of 4.75%. This is either because they are sourcing their materials at a higher cost than the industry average or they charging a lower price to effectively compete. Ultimately, Ryan Boots is generating less income than the industry per unit sold. In addition, ROA for Ryan Boots is also less than the industry average, which indicates other firms in the industry are utilizing their assets more efficiently to generate income. Return on Equity for Ryan Boots is higher than the industry average but this is most likely attributable to their higher leveraged position with a debt to assets ratio of 64.5% in relation to 25.05% of the industry. Furthermore, Ryan Boots has a lower receivables turnover which means that Ryan Boots will require increased short-term funds to finance their receivables and their cash position will be strained. Their inventory turnover is better than the industry average, meaning that they are stocking inventory more efficiently than other firms in the industry which will benefit their cash position. Their current ratio is above the industry average, indicating that Ryan Boots holds more current assets or liquid assets in relation to their short term liabilities indicating a stronger short term liquidity outlook. Their Quick Ratio however is below the industry average implying that although Ryan Boots is stocking inventory more efficiently reflected in their inventory turnover, they are also holding larger amounts in relation to their current assets. Their interest coverage is also less than the industry average, indicating that Ryan Boots will have more difficulty in meeting their debt service obligations in relation to the industry average. This can also mean that Ryan Boots has a more leveraged position or is generating less income than competitors. The same applies for their fixed charge coverage, which is lower than the industry average, meaning they will have more difficulty covering their fixed costs and most likely that their income is less in relation to their competitors.

To improve the company's performance, firstly I would suggest improving the receivables turnover. This can be done by either reducing credit sales, or more efficiently enforcing the collection policy. This should be done with caution however if the credit policy of the company serves as a competitive advantage and it is likely that it is given the large deviation from the industry average. Profit margin can also be increased, by increasing price or more effectively negotiating materials expenses. Again that might not be possible if a lower price is a competitive advantage or the firm does not have enough buyer power. Ultimately the firm will have to increase their sales, while managing their assets and particularly their fixed assets to achieve higher economies of scale to improve their return on assets, while at the same time either maintaining or increasing current