Ratio Analysis

Ratio Analysis

Ratio analysis usually helps in revealing the financial health of the company. When calculating the ratios, it helps in allowing one to compare the ratios of the company to that of its competitors. Ratio analysis provides a logic way of studying the inner workings of the relationships between the items in the company. From the results of the ratio, it has made it possible to determine the marketing challenges that Sketchers is facing. The sales ratio should directly affect the results of the profitability of the company, and when having the returns on sales, it provides the company with a clear picture of the generated amount of profit from the sales (Siddiqui, S 2006). From the profitability ratios, the company was able to determine the first marketing challenge that had a negative effect on the way the customers viewed the product.

This has tarnished the image of the product; thus, causing low sales and loss of customers. From calculating the profitability ratios from the sales, it was possible to determine what the cause of low sales was.  One of the solutions to the marketing challenge that the company has been facing is rebuilding the tarnished name of the product. This will ensure that the product sold to people provides them with health benefits and no false claim of weight loss. By re launching the product again to the market, it will obviously attract more customers to try and test the new product; thus, increasing sales and overall profit of the firm. This solution will obviously put the company in a competitive advantage, and it will result to an increase in profitability and efficiency.

Reference

Siddiqui, S (2006). Managerial economics and financial analysis New Age international Limited Publishers

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