Profitability Ratios Profitability Ratios attempt to measure the firm’s success in generating income. These ratios reflect the combined effects of the firm’s asset and debt management. Profit Margin The Profit Margin indicates the dollars in income that the firm earns on each dollar of sales. This ratio is calculated by dividing Net Income by Sales. Return on Assets (ROA) and Return on Equity (ROE) The Return on Assets Ratio indicates the dollars in income earned by the firm on its assets
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Gibbs’ (1988) Reflective Cycle Gary‚ Andrea‚ Nick & Omar Gibbs’ reflective cycle is a common model for reflection. It includes 6 stages of reflection Gibbs (1988) reflective cycle • It is a never ending cycle‚ whereby theory and practice constantly feed each other • It can start as quite a shallow process‚ but the more you develop and the more you begin to analyse the tasks‚ the deeper your learning experience becomes • In professional practice‚ tasks do not always follow set procedures – you
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Report - Financial Analysis | 2011-2012 | | Subject : Financial Analysis For Managers | 11/19/2012 | Course Leader: Prof. Richard West Module Leader: Prof. Bijan Hesnib Submitted By: Riyank Mehta - 140550891 Jay Sanghvi - 140248921 Anirudh Thakor - 140994501 Jigar Ajmera - 140249021 1. Executive Summary This report is a summary of the comparison of ratio analysis of two companies Morrisons Plc. and Sainsbury Plc. for the accounting period 2010-2011
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University. 1 Introduction There is a trade-off between liquidity and profitability; gaining more of one ordinarily means giving up some of the other. Liquidity means having enough money in the form of cash‚ or near-cash assets‚ to meet your financial obligations. Alternatively‚ the ease with which assets can be converted into cash. Profitability is a measure of the amount by which a company’s revenues exceed its relevant expenses. It is obvious that excessively high levels of liquidity will not
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LIQUIDITY Liquidity ratios are used to determine a company’s ability to meet its short-term debt obligations. Investors often take a close look at liquidity ratios when performing fundamental analysis on a firm. Since a company that is consistently having trouble meeting its short-term debt is at a higher risk of bankruptcy‚ liquidity ratios are a good measure of whether a company will be able to comfortably continue as a going concern. Working Capital Working capital is the amount by which the
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The 1988 Gin DBQ During the mid to late 18th century‚ England went through many difficult times one of which revolved about the English Parliaments decision to pass the Gin Act of 1751 that restricted the sale of gin. This act did this in three ways‚ first by not letting distillers sell to unlicensed merchants‚ second by restricting the retailers by only those with a significant amount of land sell gin‚ and thirdly by charging high fees to all those still able to sell gin. This reasonable decision
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Liquidity Ratio Analysis What It Measures Liquidity ratios are a set of ratios or figures that measure a company’s ability to pay off its short-term debt obligations. This is done by measuring a company’s liquid assets (including those that might easily be converted into cash) against its short-term liabilities. There are a number of different liquidity ratios‚ which each measure slightly different types of assets when calculating the ratio. More conservative measures will exclude assets that
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QUESTION 1 i. Current Ratio = Current Assets/Current Liability = $ 14‚651‚000/$ 19‚639‚000 = 0.750 ii. Quick Ratio = (Current Assets – Inventory) / Current Liability = ($ 14‚651‚000 – $ 6‚136‚000) / $ 19‚539‚000 = 0.436 iii. Total Assets Turnover = Sales/Total Assets = $ 167‚310‚000/$ 108‚615‚000 = 1.540 iv. Inventory Turnover = COGS/Inventory = $ 117‚910‚000/$ 6‚136‚000 = 19.216 v. Receivable Turnover = Sales/Account Receivables = $ 167‚310‚000/$ 5‚473
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Profitability Ratios A class of financial metrics that are used to assess a business’s ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios‚ having a higher value relative to a competitor’s ratio or the same ratio from a previous period is indicative that the company is doing well. Gross Profit Margin A financial metric used to assess a firm’s financial health by revealing the proportion of
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Profitability Ratios Profitability ratios measure two aspects of a corporation’s profits: (1) those elements of operations that contribute to profit and (2) the relationship of profit to total investment and investment by stockholders. The first group of profitability ratios [gross profit (or gross margin) percentage‚ operating margin percentage‚ and net profit margin percentage] expresses income statement elements as percentages of net sales. The second group of profitability ratios (return on
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