Quality Furniture Company

Case 13-6

Quality Furniture Company

Prepared by:

Dustin Tebbetts-Fiore

For

Professor C.E. Reese

in partial fulfillment of the requirements for

ACC 770- Managerial Accounting

School of Business/Graduate Studies

St. Thomas University

Miami Gardens, FL

Term A3/ Summer, 2012

May 31, 2012

Table of Contents

Issues

Facts

Analysis

Conclusions

Table of Ratios

Issues

1) What do you think is happening at Lloyd's and The Emporium?

2) What financial ratios and questions raised in your analysis of the two companies' financial statements support your opinions?

Facts

Quality Furniture Company was concerned about two of it's accounts in the state of Minnesota; Lloyd's Inc. and The Emporium. Lloyd's was a retailer of fine home furnishings. Lloyd's sales experienced a slight downturn in the midsummer months and a slight upturn during the holiday season in December. Approximately 75% of Lloyds' sales were paid for with cash or a credit card and 25% were financed on six month installment terms. These terms called for 25% of the purchase price as a down payment and the remaining 75% to be paid in equal monthly payments over a six month period. Lloyd's has been a customer of Quality for over 30 years. The Emporium was a medium sized department store and had only been doing business with Quality for the past decade. Both Lloyd's and The Emporium accounts were sold on terms of 2%, 10, net 30. Lloyd's has a $50,000 credit limit with Quality as opposed to an $85,000 credit limit for The Emporium.

Beginning in 2000 the furniture industry began to experience some difficulty because of the