Question

Tiffany & Company is a luxury jeweler and specialty retailer that sells timepieces, sterling, china, crystal, fragrances, and accessories through its retail stores worldwide. Signet Jewelers Ltd. operates a number of well-known retail stores (Belden Jewelers and Kay among them) that sell moderately priced jewelry and other items. Selected financial on about each company for the year ended January 31, 2015, follows:

	Tiffany	Signet
Sales	$4,249.3	$5,736.3
Net Income	$484.2	$381.3
Return on Assets	10.5%	7.8%
Profit Margin	12.3%	7.0%
Asset turnover	0.86 times	1.11 times

REQUIRED:

(a) The profit margin at at Tiffany & Co. is higher than at Signet Jewelers. What is it about each company's strategy and positioning that might explain the profit margin difference? You may want to visit each company's website before answering this question.

(b) The asset turnover at Signet Jewelers is higher than at Tiffany & Company. What is it about company's strategy and positioning that might explain the asset turnover difference?

Answer 1

The profit margin of tiffiny company is higher compare to signet jewelers due to following reasons

1) Turnover of signet jewel is higher than tiffiny co however net income of signet jewel is lower than tiffiny co

2) It may be due to reason that Expense of signet jewel is more than tiffiny co whether it is direct expense or indirect expense..

3) proportion of fixed expenses may be higher of signed jewels than that of tiffiny jewel

4) More investment have been made by in fixed asset than that of tiffiny jewel

B)

Signel jewelers have higher asset than tifiiny that may be reason of higher asset turnover ration

Return on asset of tiffiny jewel is higher which saws that less investment have been made by tiffiny jewel in asset than signel jewel

Tiffiny jewel may wants to expect higher return by minimum investment in aseset and signel jewel wants to expect more more return by acquiring of new asset in the business