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Unformatted text preview: nature of many of its products. The rapid inventory turnover increases sales and thereby the fixed asset turnover. Home Depot has the next highest profit margin for ROA and the next lowest assets turnover. We can expect Federated Department Stores to have the highest profit margin, given its name brand apparel and other upscale products. Federated does have the lowest cost of goods sold to sales percentage, consistent with its greater ability to mark up selling prices over cost. Federated has the second highest profit margin and the slowest assets turnover of the three companies. Its product line is less commodity than Albertson’s or Home Depot. The greater use of sales personnel in stores increases its selling expenses. Its inventory turnover is the lowest of the three companies because it uses low prices less as a strategy. Therefore its total asset turnover is the lowest of the three companies....
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- Spring '08
- Economics, Profit margin, Federated Department Stores, highest profit margin, rapid inventory turnover