Free Essay Example. Ross Inc Financial Analysis

Ross Stores, Inc., for a long, has been operating under the name Ross dress for less. Its first debut was in 1950 by its founder Morris Ross who was by then known by the name 'Morrie.' The store would be in operation for about 85 hours in a whole week, maintaining buying and also bookkeeping for the entire store. In 1958 when the company was only eight years old in the market, it was sold to William Isackson, who then constructed six stores that were in Redwood City, Castro Valley, San Bruno, Pacifica, Novato, and Vacaville. In 1982, a group of investors, however, purchased the six stores that were located in San Francisco and by changing the policy of sale to off-price, led to the expansion of chains to approximately 107 stores with the purchase generated from the stores being good, the company traded at around $ 1.4 billion with 292 stores and also spread in 18 states. By 2012 the company was then worth $9.7 billion is located in 33 states and also has about 1091 stores. The company is a departmental store and has a chain of such with its headquarters being located in Dublin, California. By the year 2018, it was duped as the largest retailer that is off-priced, operating in thirty-seven states in the U.S. and having around 1483 stores. It is also the preferred store in the districts of Columbia and Guan but has not yet headed to New England, New York, any area in the Midwest, the northern parts of New Jersey, and also Alaska.

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As per the filing, the company's targeted market is mostly people who live on a middle income. Barbara Rentler became the CEO in 2014, a position formerly headed by Michael Balmuth, and became the 25 female CEO of a company esteemed as Fortune 500. The company operates in a way that would also benefit the consumers by saving the consumer's expenditure and also keeping the cost which they use for operational purposes relatively low. In the past three years, Ross Dress for Less has achieved replacing traditional retailers by their frequent opening of new stores. The company primarily operates two brands of home fashion stores Ross dress for less and dd's DISCOUNTS but Ross is larger. Ross offers around a moderate 20% to 60% percent offer on daily prices while offering quality home fashions that are suitable for the entire family. Since the company has largely invested in customer satisfaction, it has then included some of the footwear, apparel that is designer-made, and also products that are not only in season but also of admirable first quality.

The company's primary objective is to refine off-price strategies to improve the financial return in the long run. By establishing appropriate targets of growth that would help in stabilizing the business, monitoring of share trends was mostly driven by the ever-committing customers of the company through the earning of gains in 2018, the merchandise is formulated in a way that they would easily take advantage of the demand for fashion across all age groups and also attractive discounts that the store is willing to offer. The sale would then be evaluated at the end of the fiscal year which is approximately 53 weeks.

As per the annual ratios of the company, many of their ratios seem to be on the increase per year and have a constant increase. The debt ratio has also reduced, and in the last three years by a favorable margin. This is definitely connected to the net profit margin that is on the increase. This is a very good sign for any investors that would be interested since the company shows signs of growth over time. The cost of the sold goods increased in three years. The company had then opened 95 net new stores that year, prompting an increase in sales by up to 4%. The sales increase of 6% in comparison to the previous years showed an impact immediately after 53 weeks in the business. Though the company has set aside strategies that they would deem as helpful, they could not always be too sure of the increase in the net earnings due to factors like competition that they would face. By the persuasion of refining existing policies and merchandising their mix to fit different diversities, the company would first have to lose and then experience the gains which would also not be a sure set.

There is a general increase in the total costs and expenses, which is expected of a company of a big profile such as Ross Inc. The net earnings are also on the increase, but it is noted that as the earnings before taxes increase, so does the provision for tax reduction. In simple terms, the taxation system of the country favors the growth of industries. An increase in sales, however, could have been caused by a reevaluation of prices by perceiving values that were expected by customers. An advantage to the company is also that they have the ability to capitalize on the idea of value by placing premium prices in clothes that are only going to be in use once in a person's life while trying to remain competitive with purchases that are common. The net expense also increases in an attempt to make the brand more prominent by promotional discounts on clothing items.

The net expense increases also by reducing the costs of the clothes to meet the customer service goals that are much desired by the company. This can easily be reduced by ensuring that the stores have only the required a number of staff. As taxation becomes included in the net expense, it may prompt the business to get into bigger debts to meet the costs of expansion, and increasing the production output quality is most likely to be affected through its reduction leading to a high chance of loss of sales or consumers.

The company has a debt of $ 313 million on its records, which has proven that Ross Stores is considered a large-cap stock. It is mostly considered financially healthy if the ratio of debt to equity is below 40%. For Ross stores, the ratio is 13.88% showing that it is not a threat to operations performed by the company. Another easier way to check on the financial health of the company is the ability of the company to service debt. With the profits made by ROST being about 175.04 times which is definitely an indicator that it is relatively safe it would be impossible for lenders to deny ROST any loan because of its safe practice and the company also is responsible The earnings for the past five years of the company's books has also been increasing with its growth rate at around 13%, and the growth rate for overtaking the industry is 8%. Such outperformance in the market indicates a strong record raising the confidence of future investors in the delivery of attractive returns.

The company has an unsecured credit facility expense that expires on April 2021, which is approximately $600 million and has a subject that could increase the size of the later by standby letters of credit, which would cost up to $300 million. The lenders of the company have also additional credit facilities that they would offer to the company of about $ 200 million under which it could be paid quarterly and only if it is upon maturity. By the year-end of the company, it has surprisingly had no borrowings and was in definite compliance with the agreement of its lenders with the facility being under the direct control of financial leverage agreement of the debt to equity ratio with the company's standby letters protecting trust between them and the debtor and letters of credit. The standby letters are protected by the equivalents of cash, investment, and also liquid cash. Ross Inc. had $13.3 million and $ 20.7 million of the letters that would be in use of credit by respectively the ended years of February 2019 and February 2018 respectively. The company has the ability to place to lease all but only leaves two locations with terms that are not cancellable and which range from about the first three years continuing to the ten years of the expiration of the agreement. Store leases made by the clients are, in most of their cases renewed with options of either four, five or six years each. Some of the store leases could have an increase in the rent paid based on whether the sale of the area would increase or decrease. In leasing, most of the company's expenses are covered aside from the fact that it also earns the company profit by being a source of continued capital.

A company is as large as Ross Inc. is expected to have the utmost sincere financial reports, as according to Albrecht (2015), management is solely responsible for fraud by the organization. In the course of the company's trade years, the company has maintained vast social networking processes building trust in many individuals and reducing the risk of financial fraud by the company. Social networking builds a company's need for transparency and also the normalization of most of deviant practices. The diffusion of the company to the market could be a factor in discouraging fraud in a majority of the organizations (Higgins, Koski & Mitton, 2016), and through the deep diffusion of Ross Inc. to the market, it is less likely that financial fraud would occur in the organization.

References.

Albrecht, C., Holland, D., Malagueno, R., Dolan, S., & Tzafrir, S. (2015). The role of power in financial statement fraud schemes. Journal of Business Ethics, 131(4), 803-813.

Higgins, R. C., Koski, J. L., & Mitton, T. (2016). Analysis of financial management. New York: McGraw-Hill Irwin.

Ross Stores Inc. (2018). Annual Report: Say Yes to Bargains