The firm needs to improve on its debt to net worth ratio because this has made its value to stay low in real market terms. It is necessary for the firm to look at how it can boost its profile in the market by identifying new revenue streams to help it grow its income. The firm needs to carry out an analysis of its operations to find out areas that need to be improved to boost performance.
Its quick ratio needs to be improved to make the firm have positive prospects in the market. This will make it possible for the firm to improve its cash flow situation to help it conduct its operations without any problems. The firm’s current ratio levels are positive but they are still below the industry average (Meggison, & Smart, 2008, p. 48). Therefore, the firm needs to improve its current ratio by disposing some of its current assets to improve liquidity. This will help it register good results in the market.
Wegmans Food Markets is an organization which operates about 80 food stores in several states in the U.S. The firm is ranked 5th on the Fortune 100 list because of its positive performance in the market. It made more than 63 million US dollars in sales revenues in 2011. The firm’s current ratios are above 2 because it has enough assets which can easily be converted to cash to pay off its creditors.
The firm’s cash flow situation is positive and this has helped it run its operations smoothly without any interruptions (Hoovers Resource, 2013). It also has a positive quick ratio that enables it use its assets to pay off all outstanding expenses. This has made it possible for the firm to conduct its business without a lot of disruptions.
The firm’s debt to equity ratio is positive and this has given the firm more leverage in the retail industry. The firm has a low debt to equity ratio and this has helped it attract more investors. The firm is in a position to generate new funds from the capital market which gives it an edge over other firms. The firm is also able to finance most of its operations which has made it possible for inbound and outbound supply chain functions to go on without a hitch (Meggison, & Smart, 2008, p. 56).
References
Hoovers Resource (2013). Wegmans food markets inc. company information. Hoovers Company Profile Information. Web.
Meggison, W.L., & Smart, S.B. (2008). Introduction to corporate finance. Mason, OH: Cengage Learning.