Strategic Account for Decision Making Essay Example | Topics and Well Written Essays - 2500 words

Strategic Account for Decision Making - Essay Example These are assessed in order. It is evident that BPC is performing better in both. The margins indicate that FF(Cardiff) has still some more opportunities to cut down costs and increase the margin by about 2%. This is also substantiated by the Expenses/Sales ratio (90% to 92%). However, FF(Cardiff) uses about  £41 ( £319 -  £278) more to generate  £1000 sales, i.e., the asset turnover rate is lesser in FF(Cardiff). This is a significant difference and so, FF(Cardiff) has to take some action to optimize the use of assets. These figures indicate that FF(Cardiff) does not utilize both fixed and current assets to the optimum extent. The ratios indicate that there is a major problem with fixed assets, i.e., BPF utilizes about  £254 of fixed assets to generate sales of  £1000 whereas FF(Cardiff) takes about  £287 worth of fixed assets to generate  £1000 sales. This difference ( £33) indicates that the processes used by FF(Cardiff) are not efficient. The current assets too have a major impact on sales (41.7x to 33x). In order to estimate the extent to which each current asset contributes to the issue, the next three ratios (7, 8 and 9) are compared with those of the best performing club (BPC). The stock turnover period indicates that FF(Cardiff) is more efficient in moving the stock. However, FF(Cardiff) can improvise on debt collection period, since it takes 3.1 days for FF(Cardiff) to collect cash whereas BPF does it in 2.4 days. These figures indicate that FF(Cardiff) takes about (365/59) 6 days to convert cash in the bank to sales, whereas BPF takes about roughly (365/83.3) 4 days to convert cash to sales. This is a significant difference (2 days), but it is not of great importance. However, FF(Cardiff) can focus on reducing the cash in the bank and convert them to sales at a faster rate, as cash kept idle does not reap any profits. As far as the liquidity ratios are concerned, there is no much difference in the current ratios (1.8:1 and 1.7:1).