...Profitability Indicator Ratios: Profit Margin Analysis In the income statement, there are four levels of profit or profit margins - gross profit, operating profit, pre-tax profit and net profit. The term "margin" can apply to the absolute number for a given profit level and/or the number as a percentage of net sales/revenues. Profit margin analysis uses the percentage calculation to provide a comprehensive measure of a company's profitability on a historical basis (3-5 years) and in comparison to peer companies and industry benchmarks. Basically, it is the amount of profit (at the gross, operating, pre-tax or net income level) generated by the company as a percent of the sales generated. The objective of margin analysis is to detect consistency or positive/negative trends in a company's earnings. Positive profit margin analysis translates into positive investment quality. To a large degree, it is the quality, and growth, of a company's earnings that drive its stock price. Formulas: |[pic] | |[pic] | |[pic] | |[pic] | Components: |[pic] | |[pic] | |[pic] | |[pic] ...
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...sales revenue decreased in 2009 from 2008 and again turned back in 2010. In 2010, Avnet experienced a significant sales increase which can be attributed to the faster turnaround of technology market after a decline. Avnet’s increase in sales volume can also account for acquisitions and the fact that 2010 was a 53 week fiscal year rather than the typical 52 week year. Gross profit margin has declined over the three year period. The reason could be lower profit margins in other regions, particularly Asia, as compared to the Americas in 2010 and lower margins in Asia and the Americas in 2009 as compared to Europe, the Middle East and Africa region. Technology Markets in late 2008 was not satisfactory but accelerated in 2009, resulting in a decline in costs of goods sold. Although the dollar amount of selling, general, and administrative expenses decreased in 2009, the percentage of these expenses compared to sales increased. In 2010 the dollars amounts of administrative expenses increased as the sales increased but the percentage relative to sales decreased. Avnet experienced a positive operating profit margin in 2008 and 2010. The operating loss in 2009 can be attributed to the restructuring, integration and impairment charges. The global economic downturn caused impairment charges for goodwill and intangible assets in several operating units. Restructuring charges including severance packages for personnel reductions and the write-down of fixed assets are parts of the cost reduction...
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...into cash. In our case, our products can easily be converted to cash. If we had a ratio of 3 or 4, we would need to be concerned because a number this high means that management has so much cash on hand, they may be doing a poor job of investing it. To follow I have graphed our current ratio against our competitors. Coca Cola being our strongest competitors have a ratio of 1.05. Although their number is a bit higher, we are still in the same range. Gross Profit Margin Our gross profit margin is 52.34. The gross profit margin ratio measures how efficiently a company uses its resources, materials, and labor in the production process by showing the percentage of net sales remaining after subtracting the cost of making and selling a product or service. Gross Profit Margin = Gross Profit ÷ Total Revenue Knowing our gross profit margin ratio is important because it tells us whether we are pricing our goods effectively. A low margin compared to our competitors would suggest we are underpricing, while a high margin...
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...Table of contents Title | Pages | 1.0 Introduction | 3 - 8 | 2.0 Financial Ratio Analysis | | 2.1 Liquidity Ratio | 9 - 12 | 2.2 Profitability Ratio | 12 - 17 | 3.0 Computation and Interpretation of liquidity ratio and profitability ratio - Dijaya Corporation Berhad | 18 - 19 | 4.0 Computation and Interpretation of liquidity ratio and profitability ratio - Encorp Berhad | 20 - 21 | 5.0 Comparison of companies’ liquidity positions and performances | 22 - 25 | 6.0 Summary | 25 - 26 | 7.0 Reference | 27 | 1.0 Introduction Tropicana Group The Tropicana Group or Dijaya Corporation Bhd brings together a range of diverse companies devoted to the same ideals – to deliver value to our customers and investors by creating quality developments in which people want to live, work and play. Tropicana is a pioneer in resort-style home concepts with a strong track record in residential and commercial developments. We consistently provide customers with attractive and sustainable developments while extracting high value from the land we develop. 90% of the Group’s revenue is generated by its property development, resort operations and property investment. The Tropicana Group also successfully manages a realm of businesses that includes Property Investment, Property Management, Investment Holding and Manufacturing. This large scale of successful ventures propelled the Group onto the Main Board of Bursa Malaysia in 1992. Since then, the...
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...FINANCIALS Summary of conclusions The company’s performance has generally been poor and is on a downward trend. The situation was made worse in 2011 by high input prices and a depreciated local currency. Costs have outpaced revenue, contributing to diminishing margins over time. Cost cutting measures and process efficiencies are required to improve margins. The downward trend on liquidity needs to be arrested on time to avoid cash flow crisis. A possible avenue could be reduction in stock holding days. There is room to improve the collection period further without affecting sales levels, as has been the case with other industry players. The interest cover has been depleted to slightly over 1 in the year, any further decline could tilt the company into losses. Possibly the company could request the shareholders to buy off the loan by injecting more capital, or issue equity to the financiers. These decisions would need to be weighed carefully before a conclusion is reached. The investors’ confidence has waned over the past few years, with the stock price hitting an all time low. Directors and management need to move in to protect shareholders investments. A strategy change is required to turn around the company, more so during this volatile period. Accounting policies. The company prepares its financial statements in accordance with International Financial Reporting Standards, from which the local Companies Act heavily borrows. Therefore the company is in compliance with...
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...1. Assessment of Dell’s performance. Looking over Dell’s financial statements many things are evident. Revenues have shown a steady increase over the past 5 years, with a most recent increase of 6.5% in 2008. Gross profit margins have steadily increased at about 18% over the past 5 years with net profit margins steadily increasing around 5%. This concludes that Dell is efficiently operating enough to recover not only the cost of the product but the cost of operating expenses and the cost of debt. Comparing Dell’s current assets to its current liabilities, it is determined that Dell has a 1.07 current ratio. Having a ratio over 2.0 indicates that a company is not investing its assets well and a ratio under 1 is considered a risk because it indicates the company doesn’t have enough cash to pay bills due over the next 12 months. Dell is within the parameters, but very close to the risk line. Looking at the acid test ratio it is determined that Dell placed low with a .75:1 ratio. This shows that Dell cannot pay their current liabilities without being dependant on the sale of inventory. Assessing Dell’s financial leverage using the debt to asset ratio one sees that Dell is financed more through equity; however, Dell’s debt is at a .82 ratio where it should be half (.50) or less the dollar amount of its total assets. To further expand on Dell’s debt, we can look at the debt to equity ratio. This ratio grew from 4.77 in 2007 to 6.19 in 2008. Having a ratio over 1 tells us that...
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...Statements of cash flows for the years ended 31 March 2012 £m Cash flows from operating activities Profit, after interest, before taxation Adjustments for: Depreciation Interest expense Increase in inventories Increase in trade receivables Increase in trade payables Cash generated from operations Interest paid Taxation paid Dividend paid Net cash from/(used in) operating activities Cash flows from investing activities Payments to acquire property, plant and equipment Net cash used in investing activities Cash flows from financing activities Issue of loan notes Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at start of year Cash/(overdraft) Cash and cash equivalents at end of year Cash/(overdraft) 225 26 18 269 (59) (17) 58 251 (18) (63) (40) 130 (77) (77) – – 53 (49) 4 2013 £m 15 33 32 80 (106) (33) 93 34 (32) (32) (40) (70) (110) (110) 100 100 (80) 4 (76) Notes: 1 The market value of the shares of the business at the end of the reporting period was £2.50 for 2012 and £1.50 for 2013. 2 All sales and purchases are made on credit. 3 The cost of sales figure can be analysed as follows: 2012 £m 241 1,804 2,045 (300) 1,745 2013 £m 300 2,378 2,678 (406) 2,272 Opening inventories Purchases (Note 2) Closing inventories Cost of sales 4 At 31 March 2011, the trade receivables stood at £223 million and the trade payables at £183 million. 5 A dividend of £40 million has been paid to the shareholders in respect of each of the...
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...Introduction of Whirlpool Corporation[1] Whirlpool Corporation is engaged in the manufacturing and marketing of home appliances worldwide. The company markets its products primarily to manufacturers, distributors, dealers, retailers and builders. Whirlpool also sells its products to other manufacturers, distributors and retailers, for resell under those manufacturers, and retailers’ respective brand name primarily in North America. The company was founded in 1906 and is based in Benton Harbor, Michigan. Some of the key competitors of Whirlpool Corporation are as below: ➢ LG Electronics ➢ Samsung Electronics ➢ Haier Electronics Group ➢ Daewoo Electronics Corporation Mission of Whirlpool Corporation[2]: The Mission of Whirlpool Corporation is “Everyone...Passionately Creating Loyal Customers for Life” Some of the key highlights of the Mission of Whirlpool Corporation are summarized below: ➢ Consumers have become very smart these days. One of the most important success factors for the consumer durable companies is to come up with innovative and new products. People always look for products which can make life easier and this sector’s success will depend on how they meet the expectation of the people. ➢ Development of existing product in the market is also very important for this sector. Every time the companies have to come up with advance versions of the existing products. ➢ The company is working...
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...the ROA ratio to two parts: Profit Margin and Asset Turnover. When we further comparing these two ratios, we found that the Asset Turnover rates of Southwest are in the middle range among all these four companies. However, the Profit Margin Ratios are low compared to its peers. The Comparative Income statement of Southwest shows that it has high sales revenue but it also has relative low net income among the peer groups. It is because Southwest has high expenditures on SG&A, depreciation, depletion and amortization, which are dragging down the net income of Southwest. Furthermore, we analyze the operating income profitability by comparing the RNOA( return on net operating asset), NOPM( net operating profit margin) and NOAT( net operating asset turnover) among these four companies. Southwest has an extremely low RNOA rate compared to its peers. As shown in the exhibit 3a, southwest has a much higher P/E ratio among the peer group. Also as shown in exhibit 3b, Southwest has the highest Net PPE compared to its peers. Southwest’s high PPE increase the Net operating Asset as well as decrease its RNOA ratio. We disaggregated the RNOA to NOPM and NOAT. As we previous mentioned, the profit margin ratio of Southwest is much lower than its peers because it has high sales revenue but low net operating profit. The huge expenditure on depreciating and amortization is the key factor of high operating expense, which also leads to a low net operating profit. Compared to its peer companies...
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...Camille Davenel December, the 17th, 2012 Corporate Finance : Financial analysis of Accor camille.davenel@gmail.com Table Of Contents I) Introduction 2 II) Economic environment 2 1) Gross Domestic Product (GDP) 2 2) Interest rate 3 III) Industry environment 5 1) Life cycle of Hotel Industry: 5 2) Hotel industry tendencies 5 3) Identify and positioning with competitors 6 4) Research & Development Fees 7 5) Competitors & Hotel industry ratios 7 IV) The company: Accor 7 1) SWOT Analysis: 8 a. ACCOR/IHG/Starwood 9 V) Global Analysis of ACCOR 10 1) Year by year 10 a. 2009: 10 b. 2010: 11 c. 2011: 11 2) Analysis of ratios 12 a. Return on Equity (ROE) 12 b. Net Profit Margin 13 c. Asset turnover 14 d. Financial leverage multiplier 15 e. Total debt 16 VI) Conclusion 17 VII) Bibilography 18 VIII) Annexes 19 Introduction * 2011 ended on positive statistics concerning hotel groups’ growth: every leader is engaged into a worldwide run, because their bank account strength depends on a geographic balance between risks and opportunities. Important hotel groups have enhanced franchise development in 2010 and have increased their number of rooms, some going beyond 600 000. For several years now, Intercontinental Hotel Group is the world leader, but it is followed by three others American groups, Hilton Worldwide, Wyndham Worldwide and Marriott. However, a European (French) group has been...
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...Overivew of Alibaba’s Business Alibaba is the largest e-commerce (online and mobile) company in the world based on gross merchandise volume in 2014. It is also the biggest e-commerce company in China dominating more than 80% of the country’s e-commerce market share. Alibaba operates a similar business model to eBay by providing technology infrastructure and marketing reach in the form of online marketplaces for merchants to conduct online transactions with cosumers and businesses. Unlike Amazon, Alibaba does not hold or sell any merchandise. Instead, Alibaba plays the role of a middleman to connect buyers and sellers and facilitating the transactions between them (MarketWatch: Alibaba, 2015). Thus, purchase of the physical merchandise is made directly from the 3rd party businesses (eCommerceFuel: Alibaba vs Amazon, 2014). Supporting Alibaba’s business through maintaining buyer’s confidence is its secured online payment platform, Alipay that provides escrow services. Alipay manages the bulk of the transactions that take place on Alibaba’s China marketplaces. Alibaba operates both China and global marketplaces. Its China marketplaces include Taobao, Tmall and Juhuasuan whose presence continues to dominate China’s e-commerce marketshare. At the end of 2015, Gross Merchandise Volume (GMV) transacted on these retail marketplaces was RMB964 billion (US$149 billion), an increase of 23% over 2014. Alibaba’s global marketplaces include Tmall global –an extension of Tmall, Aliexpress...
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...Headquarters | U.S. | Current CEO | Michael Dell | Revenue | $ 63.07 billion (2012) | Profit | $ 3.49 billion (2012) | Employees | 110,000 | Main Competitors | Apple Inc., Samsung Electronics Co., Ltd., Lenovo Group Limited, Hewlett-Packard Company, Sony Corporation, Fujitsu Limited and many others. | Dell Inc. is an American multinational computer technology corporation that develops, sells, repairs and supports computers and related products and services. The company is one of the largest technological corporations in the world and is listed as number 44 in the Fortune 500 list. It is the third largest PC vendor in the world after HP and Lenovo. You can find more information about the company in its official website or Wikipedia’s article. SWOT Dell SWOT analysis 2013 | Strengths | Weaknesses | 1. Brand name valued at $7.5 billion2. Product customization3. Environmental record4. Competency in mergers and acquisitions5. Direct selling business model | 1. Commodity (computer hardware) products2. Poor customer services3. Low investments in R&D4. Weak patents portfolio5. Too few retail locations6. Low differentiation | Opportunities | Threats | 1. Expand services and enterprise solutions businesses2. Obtain more patents through acquisitions3. Strengthen their presence in emerging markets4. Tablet market growth | 1. Growing demand for smartphones and tablets2. Profit margin decline on hardware products3. Slowing growth rate of the laptops market4. Intense competition...
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...of two companies are calculated as follows： Ratio | Intel | Microsoft | return on equity=net profitsharesholder's funds(equity)×100% | 962058256=0.17 | 496578944=0.06 | asset turnover=salessharesholder's funds(equity)×100% | 5270858256=0.90 | 1989678944=0.25 | net profit margin=net profit (before or) after taxsales×100% | 962052708=0.18 | 496519896=0.25 | gross profit=gross profitsales×100% | 3152152708=0.60 | 1429419896=0.72 | operating profit=operating profitsales×100% | 1229152708=0.23 | 607319896=0.31 | current ratio=current assetscurrent liability×100% | 3208413568=2.36 | 7491828774=2.60 | stock-holding period=inventorycosts of sales×365 | 417221187×365=71.8 | 19385602×365=126 | average debtors collection period=trade receivablessales×365days | 617652708×365=42.8 | 1911819896×365=350.7 | average creditors payment period=trade payablessales×365days | 1119121187×365=192.8 | 101825602×365=663.4 | gearing=all borrowingssharesholder;s funds(equity)×100% | 1316558256=0.23 | 1260178944=0.16 | The ratio will be analyzed from four areas of interest: profitability, liquidity, gearing and investment performance. Profitability Indicators Ratios： Profitability is the ability of a business to earn profit over a period of time. The profitability ratios show the combined effects of liquidity, asset management and gearing on operating results. The overall measure of success of a business is the profitability, which results from the effective use of its resources....
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...QANTAS 2015 v 2013-2014 results Executive Summary Company Overview – 320 words Qantas was founded in 1920 and has grown to be Australia’s largest domestic and international airline. The key market is the transport of airline passengers both domestic and internationally however, the group has expanded to include Qantas freight, Jetstar and Qantas frequent flyer. Qantas holds a market share of 65% through its Qantas and Jetstar operations. The company has successful duel branding strategy between Qantas and Jetstar. Qantas offering a full cost service and Jetstar, the low cost carrier airline which has driven significant growth over recent years including its international expansion. This is a clever move from Qantas as it allows the Group to hold the largest market share in both the business and low cost ends of the market. The Group has also pursued an expansion into Asia through its low cost carrier, Jetstar. This in turn has proven successful and is now the largest low cost carrier in the Asia-Pacific region. The company has undertaken a significant transformation of its international business which has resulted in a $171m improvement to the underlying performance. Further improvements as part of this process will see the segment return to profitability. With over $3bn in cash and a further $400m in available facilities Qantas maintains a very strong liquidity position. Its ability to defer significant capital expenditure can also provide further capacity over...
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...Total Cost 9% ₹ 53111 Million (2013) ₹ 3654 Million (2014) 30% Receivables Secured Loan -15% PAT Secured Loan 53% ₹ 2393 Million (2013) -100% CASH FLOW ANALYSIS Britannia is concentrating more on investment than Nestle. ₹ 17964 Million (2014) Operating Activities 6% ₹ 16933 Million (2013) ₹ (9408) Million (2013) Decrease in cash outflow from Investing activities company is investing less Less expansion plans ₹ 6145 Million (2014) Operating Activities 126% ₹ 2720 Million (2013) ₹ -2273 Million (2014) Investing 522% Activities ₹ 539 Million (2013) ₹ (3591) Million (2013) Increase in cash outflow from Investing activities company is investing more More expansion plans High future growth Increase in profits Increase in cash flow from operating Investing Activities 53% ₹ (4409) Million (2014) ₹ (5801) Million (2014) Financing Financing 13% ₹ (5131) Million (2013) Activities 9% ₹ (3254) Million (2014) Repaying long term loan which is causing outflow Activities Cash Balance 2013- ₹5907.3 2014- ₹13660.7 Cash Balance 2013- ₹-70.2 2014- ₹546.9 Cash...
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