Hypermarket financial situation
Hypermarkets work in a very specific way from the financial point of view. The most important issue to understand how they work is the moment when hypermarkets start their functioning. They need to purchase a lot of goods in order to sale them in the near future. What they do is that they set their payments for 60 or 90 days. They will receive the money from the consumers sooner than that and they will be sure that they will be able to pay their liabilities. Their suppliers also won’t worry, because a
A traditional hypermarket.
hypermarket “always” will or at least should be solvent. Even if in the balance sheet current liabilities are higher than current assets, hypermarkets will be able to close their financial year with a profit. Their main advantage is that hypermarkets are selling basic goods that people will always need to buy in good times and in bad times. What is even more important is that hypermarkets can afford to set a low price. It is due to their power of negotiating low prices while purchasing great amounts of goods. It is an enormous advantage that small groceries stores can not afford. Another important thing is that any financial analysist looking at the balance sheet would tell that hypermarkets (of course they wouldn’t know what kind of company they are analyzing) are short on liquidity. But as they have a high cash flow they do not face this kind of problems
This is why during crisis times in Spain hypermarkets don’t have so many problems at least as far as financial terms are concerned. Another aspect of Spanish hypermarkets is that in the current situation they don’t want to risk on any situation. This is why even if the financial leverage ratio is high enough, Spanish hypermarkets won’t leverage.
Advantages of this sector are incomparable during crisis times. They main strength is that hypermarkets will always have customers, unless a big change comes in peoples opinion towards supporting small stores or being self-sufficient.
Comments Off on Hypermarket financial situation /
27 Nov 2011
por
Piotr Adam Lubiewa-Wielezynski
IMSD /
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