Holly Fashions Ratio

Mini Case on Ratio Analysis

Instructions:

This case accounts for 3% of the total grades of the course. There are two parts in this case assignment. In Part One, you are asked to calculate different ratios of the company. Please fill in your answers in Exhibit 3 and PRINT out the table. Please also provide the detailed calculation steps for each ratio. You can either type or handwrite the calculation steps. Part One is due September 18th. Please refer to the formulas in Chapter 3 in the textbook on the calculation and explanation of various ratios (a copy of the formula table is also attached).

You should also think about the questions listed in Part Two to prepare for an in-class discussion on September 18th. After the in-class discussion, you are asked to provide written answers to all the questions (including both Part I and Part II). Formally typed answers will be collected on September 23rd. Please answer the questions in Q&A format instead of a comprehensive essay format.

HOLLY FASHIONS

Billion-dollar apparel companies such as Calvin Klein and Liz Claiborne are unusual in the garment industry, which consists primarily of much smaller apparel makers. One such firm is Holly Fashions (HF). HF was started by William Hamilton and John White, who between them had over 25 years of experience with a major garment manufacturer. And the partnership initially blended very well. Hamilton, reserved and introspective, is extremely creative with a real flair for merchandising and trend spotting. Mainly as a result of his genius, the HF label is synonymous with quality and “in” fashions. White, outgoing and forceful, has contributed important merchandising and marketing ideas, but has mainly assumed the duties of the firm's chief operating officer.

Hamilton has had little interest in the financial aspects of the company, much preferring to work on designing new fashions and the development of marketing strategies. A few months ago, however, he decided that he had...