problem 6.2

problem 6.2 - that their operating profit margin seems to...

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There are many different things that need to be changed based off looking at this chart. For starters one of the possible reasons this company has profitability problems is that its return on assets and fixed asset turnover has declined over the years. This suggests that their net sales have also decreased or they increased on their plant, property, and equipment. In the case that they might have increased their property, plant, and equipment this means that the company will also have an increase in depreciation over the years which also cause a decline in profit. Another possible reason for their profitability issue is
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Unformatted text preview: that their operating profit margin seems to have declined. This is caused by having an increase in depreciation and having to deal with other operating expenses. This reason kind of sheds a little more light on the above suggestion that their main problem is an increase in plant, property, and equipment. The company also had an increase in their interest expenses as well as their leasing payments and that means more bills and less profit. And lastly another huge reason for profitability issues is that the profit margins have decreased. This causes the company to have to pay increased taxes over the years....
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