The April 23, 2008, issue of the Wall Street Journal includes an article by Vanessa O’Connell entitled “Coach Profit Is Up but Margins Are Tightening.”

Instructions Read the article and answer the following questions.

(a) Referring to the ratios that were presented in this chapter, interpret the first paragraph of the article.

(b) Explain why investors would be angry that the company has stopped reporting the amount of its sales from outlet malls separately from its sales at full-priced stores.

(c) The article says that the gross margin (gross profit rate) fell from 77.8% to 75%. According to the article, what were the two causes of this decline?

INTERPRETING FINANCIAL STATEMENTS