Case 13-6
Quality Furniture Company
Pablo Santacruz
For Professor C. E. Reese
In partial fulfillment for the requirements for
ACC 770 – Managerial Accounting
School of Business/Graduate Studies
St. Thomas University
Miami Gardens, Fla.
Term A2/ Fall, 2014
November 6, 2014

Table of Contents 1. Issues: Questions 2. Facts 3. Analysis 4. Conclusions: Solution and/or Recommendations 5. Reference/Citations/Bibliography

Issues (Questions at end of case facts) 1. What do you think is happening at Lloyds and The Emporium?
Both companies are experiencing declines in sales and profits, as well as a considerable impact by the economic downturn in the year 2000. Both of the companies have exceeded their allowance on accounts payable to Quality. Lloyd’s owes 135% of its $50,000 allowance while The Emporium owes 140% of its $85,000 allowance (Anthony). The Emporium seems to be experiencing more problems relating to liquidity than Lloyd’s. Both the quick and current ratios are below the ideal level. Lloyd’s appears to have issues with debt, which is evidenced by their abnormally high debt ratio. Both Lloyd’s and The Emporium are experiencing solvency issues, which is shown by the low rate of return on net sales that both companies are showing on their financial statements. Lloyd’s is in the worse position of the two companies, in matters of solvency due to its negative rate of return on net sales during the last 2 years.
Lloyd’s has been hit the hardest from the two companies because they are a retailer of fine furnishing. The financial statements provided in the case are made during the years of economic struggle, where the demand for luxury goods decline first, and more rapidly than normal goods. The Emporium has managed to stay at least slightly profitable, because they are a medium sized department store and offer furniture of a lesser