Comparing Foot Locker And Dsw's Asset Turnover
these companies will fare differently if market conditions change suddenly. For example, in the case of a stock market decline where stockholders would begin pulling their equity out of the companies, Wolverine Worldwide and Caleres will fare better than Foot Locker and DSW. If, however, interest rates begin to rise, making all liabilities more expensive, Foot Locker and DSW will be better off.
Activity
The shoe retailers’ activity can be measured by their asset turnover ratios, or how fast they can move products from the manufacturing facilities to the end consumers. Foot Locker and Caleres both have high asset turnover ratios, meaning that they are the quickest and most efficient at distributing and selling their products. DSW’s asset turnover
ratio is slightly lower than theirs, while Wolverine Worldwide’s is significantly lower than all the others. Wolverine Worldwide struggles the most to move product off the shelves, meaning that they will incur more storage, distribution, and selling costs than their competitors. Higher costs will impact their profit margins, and may negatively affect their ability to competitively price their merchandise.
Profitability
The profitability of the four shoe retailers is measured in their net margin, return on asset, and return on equity ratios. Foot Locker achieves high results on all three ratios, meaning that it is the most profitable of the four competitors. All of the other companies have moderate to low net margins, which means a smaller proportion of their sales are making it into their net income. This is most likely due to poor expense management, and high cost of goods sold and selling expenses. Wolverine Worldwide, DSW, and Caleres also have relatively low return on equity ratios, which means that they are not utilizing their equity efficiently to create sales and profits. If this ratio decreases to too great an extent, they will not be able to cover all of their costs, which could create a going concern for the companies.
Market Performance
The stock market performance of the four competitors, as seen in figure Y, shows that they all took a small hit in the first two to three months of 2014, but all except DSW recovered and
Activity
The shoe retailers’ activity can be measured by their asset turnover ratios, or how fast they can move products from the manufacturing facilities to the end consumers. Foot Locker and Caleres both have high asset turnover ratios, meaning that they are the quickest and most efficient at distributing and selling their products. DSW’s asset turnover
ratio is slightly lower than theirs, while Wolverine Worldwide’s is significantly lower than all the others. Wolverine Worldwide struggles the most to move product off the shelves, meaning that they will incur more storage, distribution, and selling costs than their competitors. Higher costs will impact their profit margins, and may negatively affect their ability to competitively price their merchandise.
Profitability
The profitability of the four shoe retailers is measured in their net margin, return on asset, and return on equity ratios. Foot Locker achieves high results on all three ratios, meaning that it is the most profitable of the four competitors. All of the other companies have moderate to low net margins, which means a smaller proportion of their sales are making it into their net income. This is most likely due to poor expense management, and high cost of goods sold and selling expenses. Wolverine Worldwide, DSW, and Caleres also have relatively low return on equity ratios, which means that they are not utilizing their equity efficiently to create sales and profits. If this ratio decreases to too great an extent, they will not be able to cover all of their costs, which could create a going concern for the companies.
Market Performance
The stock market performance of the four competitors, as seen in figure Y, shows that they all took a small hit in the first two to three months of 2014, but all except DSW recovered and