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Unformatted text preview: than 1 is considered to indicate high-quality earnings because each dollar of income is supported by one dollar or more of cash flow. Thus, a quality of income of 1.73 and 1.76 shows high-quality earnings. Profit margin has decreased from 8% to 4% due to a decrease in net income with an increase in net sales revenue. For 2008, Each dollar of J Crew’s sales generated 8 cents of profit but 4 cents for 2009. It could be explained by the fact J Crew reduced the prices of their products in order to boost their sales volume. A decrease in fixed asset turnover ratio shows that J Crew has operated less efficiently. This means that J Crew’s ability to effectively utilize its fixed assets to generate revenue has dropped....
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This note was uploaded on 02/17/2010 for the course ECON ECON taught by Professor Shomali during the Spring '04 term at University of California, Berkeley.
- Spring '04