IVEY Case AMERICAN APPAREL: DDROWNING IN DEBT? Case Questions Please address the following questions regarding the American Apparel case. Be specific in your replies and remember that this is a graduate level assignment. I am looking for analysis and an indication that you not only thoroughly read the case, but that you understand and can make an informed reply and recommendation. The overall goal of this case is for you to evaluate the financial performance of the company and to recommend a future course of action. Don't limit yourselves to what we have discussed in class, move outside the box. You may want to research recent articles and sources outside the case to enhance your understanding and response. 1. Using financial ratio analysis, you will find some ratios in module 4, evaluate American Apparel's financial performance for the past five years. At a minimum, discuss the results of the following ratios: Leverage or long-term solvency . Interest coverage Liquidity or short-term solvency . Efficiency or activity Overall profitability Cash performance 2. Analyze the company's financial statements on the basis of its common size statements. What additional insights do these statements provide? 3. Which financial performance factors caused this growing company to become a debt-ridden enterprise? On the basis of the financial performance analysis, what actions do you recommend to prevent the company from falling further into debt? 4. Does Dov Charney's termination affect the company's ability to repay its debts? Do you agree with the statements that American Apparel has lost its appeal and that Charney has lost his charm