Nguyen 1
David Nguyen
Professor Epstein
Business 101
21 October 2008
Financial Statement Case Study
Base on the data that I have recovered for J Crew Corporation, it seems that the
company’s liquidity appear to have increased from 2007 to 2008. At first glance, it may seem
that the company’s liquidity have fallen from 2007 to 2008 because the current ratio of 2007 was
1.732x while the current ratio of 2008 is 1.708x. This means that for every one dollar of liability,
the company has $1.732 and $1.708 of current on hand, respectively. However, when the quick
ratio comes into play, it shows that without the company’s inventory, the company would have
$0.89 of assets per $1.00 of liability in 2008 and $0.85 of assets per $1.00 liability in 2007. This
means that if the company had to pay up all of its liabilities in a matter of days, it would be more
successful in 2008. In addition to the current ratios, in 2008 a smaller percentage of J Crew’s
assets are financed by debt.
The liquidity or current ratio of the company cannot be fully understood just by looking
at the ratios. This ratio must be compared with companies in the same industry. While looking at
The Gap and American Eagle (Christina and Nkechi’s Company) it seems that their current ratio
is higher than that of J Crew. American eagle had a current ratio of 2.6x in 2007, and moved up
to 2.7x in 2008. On the other hand, The Gap had a current ratio of 2.213x in 2007 and moved
down to 1.679x in 2008. This shows that companies in the same industries as J. Crew had
approximately the same liquidity level even though American eagle had about 1 point higher.
Nguyen 2
This may indicate that American Eagle aren’t financing their assets efficiently. Due to all of this
data, I believe that J Crew’s liquidity has slightly increased from 2007 to 2008.
Sales
Cost of Sales
Gross Profit
SGA
Net
Income
Cash
Inventory
Fixed Assets
Long-Term Debt
Total Equity
2008
$1,334,723,000
$746,180,000
$588,543,000
$416,064,000
2007
$1,152,100,000
$651,748,000
$500,352,000
$374,738,000
Percent Change
15.85%
14.49%
17.63%
11.03%
$97,075,000
$77,782,000
24.80%
$131,510,000
$158,525,000
$305,014,000
$125,000,000
$140,322,000
$88,900,000
$140,670,000
$252,491,000
$200,000,000
$5,620,000
47.93%
12.69%
20.80%
37.50%
2396.83%
Finanicial Statement Analysis
2008
Current Ratio
1.708x
Debt-To-Assets
Ratio
61.18%
Return On
Investment
69.18%
Inventory Turnover
8.42x
Profit margin
7.27%
Return on Assets
18.12%
Earnings Per Share
$1.61
2007
1.732x
84.10%
1384.02%
8.19x
6.75%
18.17%
$1.61