Assignment 1 Essay Example

Recommendations

Country Road Limited & The Reject Shop Limited needs to reduce the indirect cost as it has resulted in the net profits to dip substantially when compared to gross profit margin. Both the organization need to look towards cutting expenses in relation to marketing, selling and distribution so that the return to the shareholders increases. Country Road Limited needs to reduce the amount of assets held by them as the return is low when compared to The Reject Shop Limited highlighting the fact that the organization has more assets than required. The Reject Shop Limited on the other hand needs to reduce the investment in stocks as it increases the current asset requirements and also increases the likelihood of the stock becoming obsolete. Country Road Limited should also look towards incorporating inventory management system along with The Reject Shop Limited so that the quick ratio also improves and the organization has stock as per the requirements. Both the organization has a high component of debt in comparison to equity which requires some measures so that the risk of the equity shareholders reduces. Both the organization needs to look towards shaping up the management by increasing accountability and fixing the budget so that the organization is able to improve its overall performance and present a better picture for the investors in the future.