The turnover ratios for TCS are best examined in comparison with other

retailers. Target is a large national non-discount retailer that also sells

home organization and storage supplies. Pier One and Bed Bath and
Beyond are both specialty retailers that additionally sell home
products. The ratios for all 4 companies are provided in table X.X The
comparison with these 3 companies will help provide context to TCS
turnover ratios. The asset turn over for TCS is considerably lower than
that of the competitors. A large portion of this can be attributed to the
high levels of good will and other intangible assets on the balance
sheet for TCS, from the elfa acquisition. The inventory turnover for TCS
is better than that of its specialty retailer counterparts, which it shows
greater efficiency, which can be attributed to TCS manufacturing the
elfa product line. The inventory turn over of Target would be expected
to be higher than that of a specialty retailer because of it large size
and higher sales volume. TCS has a lower PP&E turnover ratio than Pier
One and Bed Bath and Beyond because of its manufacturing facilities,
whereas its competitors purchase their good from other manufactures.
Targets lower PP&E ration can be attributed to its much larger
footprint and higher volume stagey.
Asset
TCS
Target
Pier One
BBBY
Table X.X

Inventory
0.99
1.69
2.01
1.85

PP&E
3.82
6.38
2.46
2.64

4.73
2.84
9.45
7.44

Liquidity for the container store is low with a current ratio of 1.32, a
quick ratio of 0.4 and operation cash flow to current liabilities of 0.51.
The ratios for the both specialty retailer competitor are higher,
signaling they are better prepared to cover their current liabilities than
TCS. Target however has slightly lower ratios. The retail industry in
general has lower current ratios, quick ratios and operation cash flow
to current liabilities ratios than other industries. Most retail companies
are less reliant on accounts receivable, as most transaction are cash.
When examining the solvency of TCS we look at the debt-to-equity
1.65 and the times interest earned 2.54. With such a high debt-toequity ratio we can see that the company is highly reliant and debt
financing much more so than the competitors that we have selected.
The TIE is also far below that of TCSs peers, the lower number will
cover the interest on its short-term debt. If however, a large amount of
debt matures and comes due TCS may have trouble covering the debt
payments, this even noted in the 10K filing. TCS has a revolving trade
line of credit to help combat the low liquidity and solvency issue. There
is currently, as of the annual report, an addition $72.8 million of

remaining credit line open. Overall there is a high degree of risk

involved with the poor ratios and high debt levels.