To measure Levi’s competitive advantage there are several key accounting ratios to figure out the economic performance as well as the accounting performance. The key ratios that are going to be used are the Return on Assets (ROA), Quick Ratio (QR), and Debt to Assets (D2A). Looking at Levi’s key ratios, they were struggling within their market in 2007t. The ROA is actually competitive in their market. The number that Levi’s should be worried about is the D2A because it is over 1 which means that it has a higher risk of bankruptcy. Looking at the financial ratios gives Levi’s a sustained competitive disadvantage.


                                              2007            2006             2005

Return on Assets           14.255%          8.523%          5.36%

Quick Ratio                        1.156             .0737           1.1296

Debt to Assets                   1.13818       1.3538           1.4358

Net revenue for 2008 was $4.4 billion, a 1 percent increase over prior year. Gross margin was strong at 48.6 percent compared to 46.8 percent in 2007. Operating income was $525 million, approximately 18 percent below 2007, reflecting investments in retail expansion, technology systems and global marketing efforts. Net income was $229 million, down 50 percent mostly due to a $215 million income tax benefit in 2007. Year-over-year earnings before tax, which exclude the “one-time” impact of the tax benefit, were comparable. Cash flow from operations was strong, which allowed Levi Strauss to invest in the business, pay a stockholder dividend and reduce debt. Net debt at year-end was $1.6 billion, the lowest year-end level since 1996. Global strategies helped them weather the economic downturn during the second half of the year. These strategies included building on LS&CO.’s leadership in jeans and khakis, capitalizing on their extensive global footprint, driving growth in the world’s developing markets, and expanding our retail network in each of our three regions—the Americas; Asia Pacific; and Europe, the Middle East and North Africa.