Chloe's Closet

Chloe owns

a

Mendez clothing

company, Chloe’’s closet. She has a team of tailor who work for 8 hours everyday from Monday to Saturday. Demand for her business is strong but there seems to be

Chloe sells to both building

department

stores and small boutique stores under the brand Chloe’s   closet.

Some

brands also ask her to manufacture

their

own

design. Business for Chloe has been good since it started last 2014. In fact, d

it

th

t

h

On December 4 2015, Chloe received a billing investment from a raw material supplier for an amount of PHP 400 000 which will be due in 5 days. She is also scheduled to pay her   employee’s   monthly salary of PHP 70 000 the following day. Upon checking her bank account, she only has a PHP 67 000 balance. She knew she had exceeded her sales

Being a CPA, she checked the bank statement and her financial records and found no mistakes. Here is the latest financial statement of Chloe’s Closet as of November 30, 2015:

STATEMENT OF FINANCIAL POSITION

INCOME STATEMENT

VERTICAL ANALYSIS

HORIZONTAL ANALYSIS

IN THIS CASE: Account Receivables

Account Payables

2014

1.20

300

2014

0.45

800

2015

1.08

333

2015

0.75

480

Inventory

2014

0.56

643

2015

0.5

720

CONCLUSION Due to the increase in accounts payable turnover ratio, decrease in accounts receivables turnover ratio and decrease in inventory turnover ratio, we can conclude that

Chloe's

closet

degraded

their

performance in 2015. They focused on sales without considering these factors.