...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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...Profit Versus Not-for-Profit Hospitals In Partial Fulfillment of the Requirements for Health Services Systems HSM 541 Blaise X. Schmidt DeVry University Keller Graduate School of Management September 2012 1.0 Purpose The purpose of this paper is to conduct a comparative analysis between for-profit hospitals and not-for-profit hospital. It will discuss the characteristics of each as well as factors affecting the operations of both systems. Additionally, it discusses potential areas of improvement and some of the challenges associated with each relative to finance and operations. 2.0 Comparing Not-for-Profit and For-Profit Hospitals Not-for-profit hospitals are organized under the Section 501 (c)(3) of the Internal Revenue Service (IRS) tax code, and as such, are exempt from federal and state taxes and generally from local property and other taxes. Not-for-profit hospitals also have access to tax-exempt bond financing and have tax-deductible status for gifts and contributions (Barton, 2010). For-profit hospitals do not have this luxury. Public or private hospitals can be classified as non-profit. Non-profits include a majority of the hospitals in the US. The two types of hospitals differ mainly in regulatory rules. Not-for-profit hospitals do not need to pay property, sales, or income taxes. For-profit hospitals do. Despite these differences, the two types of ownerships have been becoming more and more similar and many hospitals...
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...for-profit and not-for profit social enterprise? Social enterprise are businesses that deal with the social problems, communities issues, people’s life chances and the environment. More over, making the world a better place is a significant part of what social enterprise do. A social enterprise also know their aims and purpose of its business clearly. Most of its income were bring in through selling goods or services. Besides, it will also have clear rules about what to do with its profits, reinvesting for the enterprise’s further “social mission”. Social enterprise can also be separated into two categories which are both for-profit and not-for profit in form. In our general mindset, for-profit enterprise always try to maximise the returns for the investors, while not-for profit companies will usually serve to public good. The biggest difference between a for-profit and not-for profit social enterprise is that the for-profit enterprise has a more attracting capital compare to not-for profit enterprise. Whereas the not-for profit enterprise usually requires certain ongoing fundraising efforts. As in detailed, a business or organisation which set its primary goal is making a profit are so called for-profit enterprise. Nowadays for-profit enterprise are more preferably by most companies because they are focusing on making profit. Does anyone who's not interested in money? Therefore for-profit enterprise is more attractive than not-for profit companies. A for-profit enterprise...
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...Profit margin From Wikipedia, the free encyclopedia Profit margin, net margin, net profit margin or net profit ratio all refer to a measure of profitability. It is calculated by finding the net profit as a percentage of the revenue.[1] \mathrm{Net\ profit\ Margin} = {\mathrm{Net\ Profit}\over\mathrm{Revenue}} where Net Profit = Revenue - Cost profit percentage is calculated with cost price taken as base. Profit margin is calculated with selling price (or revenue) taken as base. Profit margin is the percentage of selling price that turned into profit, where as profit percentage is the percentage of cost price that one gets as profit on top of cost price. So while selling something one should know what percentage of profit will he get on a particular investment so companies calculate profit percentage to check what is ratio of profit on the basis of cost. The profit margin is mostly used for internal comparison Suppose you buy something for $100 and sell it off for $150. cost price = $100 selling price (revenue) = $150 profit = $150 - $100 = $50 profit percentage = 50% (profit as percentage of cost price) profit margin = 33.33% (profit as percentage of selling price or revenue) The profit margin is mostly used for internal comparison. It is difficult to accurately compare the net profit ratio for different entities. Individual businesses' operating and financing arrangements vary so much that different entities are bound to have different levels of expenditure, so...
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...Profit = TR – TC How to increase profit: 1. Increasing the number of products sold (at the same price). 2. Increase the profit on each product sold (i.e. increase the per unit profit) – either by: * decrease per unit cost * increase price Gross profit Gross profit = Total Revenue- Variable Costs Net profit Net profit = Total Revenue – Total Cost Profit Margins The amount of total revenue (%) that is kept as profit. profit margins = profit / total revenue x 100 To increase profit margins, the firm needs to reduce costs or add value. Gross profit margins Gross profit as a % of total revenue. Gross profit margin = gross profit / TR x 100 Note – if VC fall, gross profit margins will increase. Net profit margin Net profit as a % of Total Revenue. Net profit margin = Net profit / TR x 100 Both VC and FC must fall for net profit margins to increase. 3 Ways of increasing profit margins: 1. Increase net profit margin / gross profit margin by reducing VC per unit. 2. Increase net profit margin by increasing price. 3. Increase net profit margin by reducing FC. Return on Capital Employed (ROCE) ROCE is the amount of profit gained from an investment as a % of the capital (finance) spent on an investment. ROCE = Net profit / Capital invested x 100 ROCE is used to see: * how profitable an investment is * how efficient management is How to increase ROCE 1. Increase profitability without investing any more capital. ...
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...Financial Management in Non-profit Organizations and How It Compares to For-Profits Organizations are usually classified as either non-profit or for-profit. Business corporations are organized for-profit. While non-profits usually include associations, charities, and other voluntary organizations formed to further cultural, educational, religious, or public service objectives. Non-profits and for-profits do have some things in common. Both types of organizations attract individuals focused on maximizing income, minimizing expenses, and reaching their goals. While there are many similarities, non-profits and for-profits have many differences. The most fundamental difference between nonprofit and for-profit organizations is the reason they exist. A non-profit organization exists to provide a particular service to a community, while a for-profit organization exists primarily to generate a profit for the company’s owners and shareholders. A non-profit organization channels all of their income into services and programs aimed at their mission compared to for-profit organizations that distribute profits between owners, employees, shareholders and the business itself (Bottiglieri, Conway, & Kroleski, 2011). Financial management for non-profit organizations is similar to for-profit organizations in many ways however key differences shift the focus of a nonprofit manager. These differences include organizational structure, ownership, distribution of profits, generating revenue and...
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...Profit maximization Timo Pitter Business Ethics Running a business with regard to Business Ethics automatically brings up the question if the sole purpose of company is maximizing its profits. In this short paper I am going to argue in favor of Profit maximization. First off all, I think if a business puts priorities on maximizing its profits, automatically acts within a social responsibility to a certain level. In other words, higher profits are proportional to an increase of the economic level of a certain country by which the society will benefit. Also if a business strives for higher profits it will pay more taxes to the government, which in fact can be invested in better infrastructure for the community. Businesses are not responsible for the welfare of the people within a society since free markets force them to play with certain competitive advantages. Next, it is absolutely crucial that the executive level of a company recognizes its obligation to their stockholders. I mean think about it, they trusted the company with money and therefore it would actually be morally wrong to ‘’play’’ careless with this money since money is the greatest tangible good a human can have. So therefore I am convinced that as long a company is not risking the life of other humans, they should absolutely maximize a companies profit. That brings me to my next point, which makes it clear that businesses have to act within a certain law in order to prevent hurting people for example...
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...certain schools, but money always gets in the way. This causes students to reach towards community colleges, trade schools, and online universities. These schools offer the same degrees faster, but at a higher cost. Kevin Carey, director of the Education Policy Program, claims for-profit colleges have too many issues within and need to be reformed for the better. He points out that for-profit schools are not all that bad. These universities offer open doors for students turned down by traditional and private colleges who seek higher education. Christopher Beha complicates Carey’s argument that for-profit schools are a form of “higher education” by using providing evidence of how classes are at these universities when he posed as a student himself. Jane Clark extends Carey’s claim that these colleges are “money-making machines” by supporting a look at how for-profits make their money. Lastly, an article by Melissa Korn from the Wall Street Journal clarifies Carey’s assertion of how for-profit graduates are not getting jobs because employers are turning down their “low-value” degrees. College is a time for many students to gain a higher form of education. Carey argues that classes taken at for-profit colleges offer are equivalent to traditional colleges. Christopher Beha, editor of Harper’s Magazine, gives a different perspective as to how these classes really are. In the article “Leveling the Field” Beha attends classes at the University of Phoenix. He talks about how his experience...
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...Schools for Profit (7) Purpose and/or definition: -There are three types of for-profit schools. One: Educational Management Organizations (EMOs) which are primary and secondary institutions. They work jointly with charter schools or schools districts, using public funding to finance operations. Two: Post-Secondary institutions which operate like strictly as businesses. They acquire funding from enrollment fees (by each student). Three: K-12 schools which also operate as businesses. -According to Kevin Carey (director of the educational policy program), “For-profit schools exist in order to fix educational market failures left by traditional institutions. They profit by serving students that private/public nonprofit institutions too often ignore.” Background Information: -The largest for-profit venture in public schools is the Edison Schools. -In 1990, Benno Schmidt, the presidents of Yale University, was attending a party. There, Schmidt met Chris Whittle. Whittle was an entrepreneur who was involved with various education-related projects. Apparently, they hit it off. Whittle offered Schmidt a reported salary of 1 million dollars a year to leave Yale and assume leadership of the Edison Schools. Whittle planned to create a model school that was based on proven educational programs-which would later be nationally franchised. Characteristics: -Edison Schools lengthen school days by one to two hours and increased the school year from 180 days to 210 days. In total, these...
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...Running Head: Non-Profit to Profit Making Plan Non-Profit to Profit Making Plan Assignment Two Strayer University HSA 505 Health Services Strategic Marketing Non-profit and for-profit hospitals come with their own set of rules, regulations, and expectations. They both work financially differently and it is known that for-profit hospitals generate millions of dollars in revenue every fiscal year. This is not the same for non-profit hospitals. Non-profit hospitals work with what the state and federal government allots them and they do not make money hand over fist. The obvious motive for turning a non-profit hospital into a for-profit hospital is for money. This paper will address the external and internal factors that influence decisions, the theory and practical framework of data, market segmentation, and analyzing of data for the switch from non-profit to for-profit hospitals. Describe the external and internal factors that influence the executive team’s decision making and specify which might be most instrumental in making the decision to become a for-profit entity. Why do you think so? It is imperative to understand the differences of internal and external factors, especially in terms of decision-making due to the fact that a problem has to be recognized in order to establish a next crucial step. In this instance the next crucial step is the decision to move from a non-profit to a for-profit entity. Within this move both internal and external factors...
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...Increasing Profits by Opening the Books - BusinessWeek keyword, company, ticker Available on the iPad SPECIAL REPORT September 23, 2010, 11:56AM EST text size: T T Business Books Track and share business topics across the Web. Increasing Profits by Opening the Books Financial transparency and giving workers at all levels a direct stake in a company's success can help boost efficiency and earnings, says Jody Heymann By Jody Heymann Open Source Software Open Innovation Open Government E-Book Readers All 213 employees at Great Little Box know exactly how profitable the business is. Executives at the Canadian packaging manufacturer discuss the company's finances, production, and sales performance in detail at monthly meetings with staff that ranges from machine operators on the factory floor to senior managers. Such open-book management is tied to the company's profit-sharing strategy: 15 percent of pretax earnings are split equally among everyone at Great Little Box. The company started profit sharing in 1991 because they believed employees would work harder if they felt "they matter and their work matters," says Margaret Meggy, who co-founded the company with her husband and now serves as its human resources chief. She's right. Our research shows that sharing financial information and profits with low-skilled workers helps boost both efficiency and profits. Yet while sharing profits and financial data with top managers is common, it is rare at the bottom...
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...Chapter 9 PROFIT MAXIMIZATION Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. 1 The Nature of Firms • A firm is an association of individuals who have organized themselves for the purpose of turning inputs into outputs • Different individuals will provide different types of inputs – the nature of the contractual relationship between the providers of inputs to a firm may be quite complicated 2 Contractual Relationships • Some contracts between providers of inputs may be explicit – may specify hours, work details, or compensation • Other arrangements will be more implicit in nature – decision-making authority or sharing of tasks 3 Modeling Firms’ Behavior • Most economists treat the firm as a single decision-making unit – the decisions are made by a single dictatorial manager who rationally pursues some goal • usually profit-maximization 4 Profit Maximization • A profit-maximizing firm chooses both its inputs and its outputs with the sole goal of achieving maximum economic profits – seeks to maximize the difference between total revenue and total economic costs 5 Profit Maximization • If firms are strictly profit maximizers, they will make decisions in a “marginal” way – examine the marginal profit obtainable from producing one more unit of hiring one additional laborer 6 Output Choice • Total revenue for a firm is given by R(q) = p(q)q • In the production of q, certain economic...
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...ReadingNote that the reader might best be served to first read the document Introduction to Organizations to understand the overall general nature of all organizations. As noted in that document, today's leaders are faced with continual change in their organizations. Consequently, today's leaders should have a strong sense of what their organizations are about. This document will accomplish that for nonprofit leaders. An organization is a collection of resources arranged to accomplish an overall goal. The purpose of a nonprofit organization is to meet one or more needs in a community. Each nonprofit describes its overall purpose in a mission statement. (Very simply put, the word "nonprofit" means an organization that does not distribute a profit.) Typical types of nonprofit services are advocacy, arts, civic, cultural, education, health and human service. Nonprofits range in size from extremely large (e.g., Red Cross, large hospitals, etc.) to...
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...everyday aspects of the corporation being ran with precision. So what happens when an organization is not ran financially like a corporation yet deals with almost the same kind of aspects? A non-profit organization can be one of the trickiest functions of business as well as be the hardest type to run on the grounds of the underhandedness that it can usually entail. While it may not come with the great financial payday, running a successful non-profit often requires twice the effort, time that it would take, as well as encouragement to run a successful multi-platform business or corporation. Non-profit organizations are for people who are passionate about a specific cause along with willing to sacrifice financial benefits in order to ensure the ultimate goal which usually is assisting the common good of the public. Although like any other businesses, some non-profit organizations have to deal with fraudulent activity as well as money hungry individuals. Non-Profit Organization So what exactly is a non-profit organization? The word non-profit invokes many sentiments that would often turn many inquirers in today’s money hungry society. However, there are many benefits affiliated with a non-profit organization both financial and otherwise. First let us properly define the term non-profit organization. According to UMUC library search a definition...
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...Profit vs. Non Profit Healthcare Organizations Prepared By: Milton Flores Table of Contents I. Introduction……………………………………………………………………………………………………………………………………3 II. Definition of Non Profit Health Care Organization………………………………………………………………………….4 III. Definition of Profit Health Care Organization…………………………………………………………………………………4 IV. Issues facing Non Profit and Profit Health Care Organizations……………………………………………………….5 V. Options to improve operations……………………………………………………………………………………………………….6 I. Introduction The debate on whether all healthcare institution should be non-profit rises many issues and they have been heavily debated. The best way to examine this to analyze if non-profit hospitals are in fact better that for profit hospitals and whether there is enough evidence data to support policies dictating ownership. Hospitals in the United States are the largest health care organization in this country. Private hospitals may either be classified as non-profit or for-profit institutions. The majority of the hospitals within the United States are non-profit. The main difference between non-profit and for-profit hospitals is the regulatory rules. Non-profit hospitals are not required to pay property, sales, or income tax. The reason that non-profit hospitals and other organizations were established was with the intention of servicing the needs of the poor. This is the reason that not-for-profit health care and hospitals are exempt from taxes, it was due to the...
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