...2012Profitability, Efficiency and Liquidity of Domino’s Pizza Enterprises Limited from 2007 to 2011 Report prepared for Domino’s Pizza Enterprises LTD Shareholders This document has been prepared for Domino’s Pizza Enterprises LTD shareholders, informing them about the Efficiency, Profitability and Liquidity of the company over the years 2007 to 2011. Efficiency, profitability and liquidity is determined by profitability ratios of the company, which will be compared to industry averages. Profitability, Efficiency and Liquidity of Domino’s Pizza Enterprises Limited from 2007 to 2011 Report prepared for Domino’s Pizza Enterprises LTD Shareholders This document has been prepared for Domino’s Pizza Enterprises LTD shareholders, informing them about the Efficiency, Profitability and Liquidity of the company over the years 2007 to 2011. Efficiency, profitability and liquidity is determined by profitability ratios of the company, which will be compared to industry averages. Friday, May 11, 2012 Profitability, Efficiency and Liquidity of Domino’s Pizza Enterprises Limited from 2007 to 2011 Report prepared for Domino’s Pizza Enterprises LTD Shareholders Executive Summary This report has been prepared to inform shareholders of the profitability, efficiency and liquidity of Domino’s Pizza Enterprises Limited. This report compares profitability ratios of Domino’s Pizza to that of the industry averages to determine its profitability, efficiency and liquidity. After analyzing...
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...performance. In a fact, interpretation of different accounting ratio lets the researcher fully understand the financial condition and performance of a business concern. Ratio itself is the comparison of one figure to another relevant figure. (http://www.investopedia.com/terms/r/ratioanalysis.asp) There are many ratios that you can use to analyze the financial health of a business. In this paper I will discuss four financial performance areas that I think are worth analyzing: Liquidity, profitability, solvency, and efficiency. I will discuss the strengths and weaknesses of using these ratios. First of all, Liquidity is the ability of the firm to convert assets into cash. It is also called marketability or short-term solvency. The liquidity of a business firm is usually of particular interest to its short-term creditors since the liquidity of the firm measures its ability to pay those creditors. Several financial ratios measure the liquidity of the firm. In other words, there are three common measures of liquidity include working capital, the current ratio and the quick ratio. Working capital measures a company’s cash flow position. The current ratio measures the degree to which current assets can be used to pay current debt obligations. The quick ratio measures the degree to which very liquid current assets can be...
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...financial data, interpreted by using ratios to compare financial variables as suggested by definition from Investors words (WebFinance, 2009). Ratio analysis will help to gain a good outlook on the financial performance and position of Bravo Ltd. This can be achieved by using various ratios to measure the profitability and efficiency of the firm as well as other factors. The ratios will also help us compare the yearly performance of the business, and will also help to highlight the financial strengths and weaknesses (Peter Atrill & Eddie McLaney, 2008, p. 182). The Concepts of Ratio Analysis The report will consist of various ratios which I will be using to analyze and evaluate the performance of Bravo Ltd. The following list of ratios is what will be used in the analysis and evaluation. Profitability Ratios • ROCE- This ratio will be used to show the profitability on capital investments • Operating profit margin- This ratio will indicate how profitable the company is relating operating profit to sales revenue • Gross profit margin-This ratio indicates how profitable the company is relating gross profit to sales revenue before the deduction of expenses Efficiency Ratios • Trade receivables-This ratio will show how long it takes for the...
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...RATIO ANALYSIS Meaning and definition of ratio analysis: Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements so that the strength and weaknesses of a firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical or quantitative relationship between two variables. Significance or Importance of ratio analysis: • It helps in evaluating the firms performance: With the help of ratio analysis conclusion can be drawn regarding several aspects such as financial health, profitability and operational efficiency of the undertaking. Ratio points out the operating efficiency of the firm i.e. whether the management has utilized the firm’s assets correctly, to increase the investor’s wealth. It ensures a fair return to its owners and secures optimum utilization of firms assets • It helps in inter-firm comparison: Ratio analysis helps in inter-firm comparison by providing necessary data. An interfirm comparison indicates relative position.It provides the relevant data for the comparison of the performance of different departments. If comparison shows a variance, the possible reasons of variations may be identified and if results are negative, the action may be intiated immediately to bring them in line. • It simplifies financial statement: The information given in the basic financial statements serves no useful Purpose unless it s interrupted...
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...that contains your answers to the above questions Financial ratios are measurements used to analyze entities of financial performance. They are several financial ratios one can choose from, the main four are; profitability ratios, efficiency ratios, liquidity ratios and solvency ratios. Each ratio has different rules and they perform in their own ways. They are important tools that evaluate the profitability, efficiency, liquidity and solvency of an entity of the firm. Profitability ratios help users of an entity financial statements determine the overall effectiveness of management regarding returns generated on sales and investments (Manley, 2009). Normally used profitability ratios are gross profit margin, operating profit margin and net profit margin. Gross profit margin measures profitability after considering cost of goods sold, while operating profit margin measures profitability based on earnings before interest and tax expense. One margin that’s often referred to as the bottom line and takes all expenses into account is the Net profit margin (Manley, 2009). Efficiency ratios are known as the ratios that measure the effectiveness of management decision making and evaluate turnover and the return on investments (Manley, 2009). Some good examples of efficiency ratios are inventory turnover, sales to receivables and return on assets. Inventory turnover measures the number of times an entire stock of inventory is repurchased; mean while sales to receivables compares trade...
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...objectives are: liquidity, solvency, efficiency, profitability and growth. Internal sources of finance come from within the business and include retained profits. External sources of finance can be classified into two forms. Debt or equity. Debt is categorised as short term or long term. Short-term debts include; overdrafts, commercial bills and factoring, whereas long-term debts include; mortgages, debentures, unsecured notes and leasing. Equity can be issued through ordinary shares or through private equity. Liquidity is the ability to pay current liabilities with current assets. The ratio used to measure the liquidity of a business is the current ratio (current assets divided by current liabilities). An accepted ratio is 2:1, meaning the business has $2 of current assets for every $1 of current liability. In order to improve the current ratio, current assets must increase and current liabilities must decrease. This can be done through selling a non-current asset to increase cash. To decrease current liabilities, current liabilities should be added to the mortgage. A mortgage has low interest rates in comparison to overdrafts, which means the business is paying less interest, which means total liabilities will decrease. Another ratio used to measure the liquidity of a business is the quick ratio (cash divided by current liabilities). The quick ratio proves the available funds to cover current liabilities. The quick ratio is a more accurate way of measuring liquidity because if...
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...during the five above-mentioned years will continue. This assumption of general stability is the most significant limitation of the analysis. The analysis will focus on the general profitability, liquidity, asset efficiency and gearing of the Company without relying too heavily on any one financial ratio or class of financial ratios. Since this analysis is focused on the risks and opportunities of a common shareholder, more weight will be given to the profitability and asset efficiency ratios as these ratios are better indicators of whether the Company’s stock will outperform the market than liquidity and gearing ratios. The Company is not overly leveraged; therefore, the Company’s liquidity and gearing ratios will only be given meaningful weight if the analysis foresees the need for additional financing in the future and that produces meaningful higher borrowing costs than would otherwise be incurred. The Company’s profitability ratios indicate that there are problems. The Company’s operating profits margin, cash flow margin, return on assets, and return on equity have all deteriorated over the past five years (see Appendices). This is concerning to the common shareholder because these ratios indicate that the common stock is likely to underperform the market. Further, the Company’s asset efficiency ratios do not indicate that this...
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...2010-2012 including balance sheet and income statement. By comparing Emirates and Singapore Airlines we can make a brief conclusion of the EA’s financial situation. 1.1 Profitability Profitability is showed by the firm’s amount and level of income, and it can indicate the increase value of capital. 1.1.1 Net Profit Margin Net profit margin indicates how well the company converts sales into profits after all expenses are subtracted out. We can see from the chart that EA’s net profit margin was dramatically low in 2012,which is due to the increasing operating costs（mainly include the shooting up of Crude Oil price). However, it's profit margin is a little higher than the competitor because of its geographical advantage. 1.1.2 Return On Asset The higher the return on assets ratio, the more efficiently the company issuing its asset base to generate airline services. So EA’s efficiency of asset used is decreasing sharply in 2012. However, EA has higher efficiency than its competitor. 1.1.3 Return on shareholders funds ROSF allows investors to see how effectively the money they invested in the firm is being used. So EA’s efficiency of money invested is decreasing. Conclusion: As seen from the profitability ratio analysis, almost all profitability ratios have been going up slightly from 2010 to 2011 and going down sharply from 2011 to 2012. The reason for this is that EA’s operating expenses have gone up. High Crude...
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...------------------------------------------------- A Report On Comparative Performance Study of Conventional and Islamic Banking in Bangladesh Course Title: THEORY AND PRACTICES OF BANKING IN BANGLADESH Course Code: FBK 312 Submitted To: Md. Nur Nabi Assistant Professor Department of Finance and Banking Faculty of Business Administration and Management Patuakhali Science and Technology University Dumki, Patuakhali- 8602 Submitted by: Group: C (Level: 3, Semester: I) Session: 2012-2013 Faculty of Business Administration and Management Patuakhali Science and Technology University Dumki, Patuakhali- 8602 Date of Submission: 09th May 2015 ------------------------------------------------- Roll No | Registration No | Name of the Students | Signature | 1203051 | 03596 | Nusrat Jahan Rupa | | 1203053 | 03598 | Nusrat Yesmin | | 1203054 | 03599 | Nisath Salsabil Urmi | | 1203056 | 03601 | Mehedi Hasan | | 1203057 | 03602 | Hasan Shahria Nayeem | | 1203060 | 03605 | Khondokar Tanveer Ahsan | | 1203061 | 03606 | Sume Akter | | 1203062 | 03607 | Rased Amer Sohag | | 1203065 | 03610 | Nusrat Jahan Pinki | | 1203067 | 03612 | Rasel Miah | | ------------------------------------------------- Group Member Details ------------------------------------------------- ------------------------------------------------- ATTENDANCE REPORT 1) Level : 3 2) Semester : I 3) Course Code : FBK-312 4) Course Title : THEORY AND PRACTICES...
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...Financial Ratios Primer Management Cases and Problem-Solving Process Spring 2012 Financial ratios can provide insight into the profitability, liquidity & coverage and efficiency of a company (1 of 3) Profitability Gross Profit Margin = Gross Profit Net Sales Operating Profit Net Sales Net Income Net Sales Net Income Average Total Assets Net Income Average Common Equity Net Income Outstanding Common Shares Impact of operating (both raw materials, and SG&A) on the finances of the company – management has more control over SG&A than raw material prices Used primarily for internal comparison since different firms spend differently on expenditures and financing Impact of raw material costs on the finances of a company Operating Profit Margin = Net Profit Margin = Return on Assets (ROA) = Relies on the capital intensity of the company – best used for historical comparison than company comparisons Return on Equity (ROE) = Used to compare the profitability of a firm compared to other firms in the same industry Earnings per share (EPS) = A ratio that is a major input for stock price valuation Financial ratios can provide insight into the profitability, liquidity & coverage and efficiency of a company (2 of 3) Liquidity & Coverage Current Ratio = Current Assets Current Liabilities Cash + Marketable Securities + Net Receivables Current Liabilities Debt Service Coverage Ratio = EBITDA Interest Expense + Year Debt Principle = Total Debt...
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...………………….. Page 5 1. Ratios…………………………………………………………………………………………. Page 6 2. Evaluation…………………………………………………………………………………… Page 7 3.1. Short term solvency or liquidity ratios Page 7 3.2. Efficiency ratios Page 7 3.3. Profitability ratios Page 8 3.4. Long term solvency ratios Page 8 3.5. Market based investment and other ratios Page 8 Conclusion…………………………………………………………………………………………………………………… Page 9 Bibliography & References……………………….………………………………………………………………….. Page 10 marketing-audit-and-plan-for-easyjet-airlines-marketing-essay.php 1. List of Tables Table 1.1 Short term solvency or liquidity ratios……………………………………………..... Page 6 Table 1.2 Efficiency ratios……………………………………………………………………..... Page 6 Table 1.3 Profitability ratios……………………………………………………………………... Page 6 Table 1.4 Long term solvency ratios……………………………………………………………. Page 6 Table 1.5 Market based investment and other ratios…………………………………………. Page 7 Summary Wesfarmers financial statement shows improvement in majority areas. Revenue has gone up indicating growth,EBIT and net profit has shown an upward trend in company’s net earnings. The liquidity, efficiency profitability, financing and market ratio indicate the state of health of the company. Basically the solvency, efficiency ratio and market based investment ratios are the powerful indicator of a firm’s performance, its ability to meet financial obligation short term or long term. Its investment...
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...research study deals primarily with the assessment of profitability, liquidity and working capital management of the privately - owned hospitals in Cagayan de Oro City that submit a complete set of financial statements in the Securities and Exchange Commission (SEC). Determining the relationship of the following variables: Profitability, Liquidity and Working Capital Management are needed to assess the Working Capital Management...
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...Interpreting Financial Results FIN 571 January 6,2014 Interpreting Financial Results In the analysis four major categories of ratios are calculated. The major classes of ratios are: liquidity ratios, debt/solvency/leverage ratio, activity/efficiency ratio and profitability ratio. The liquidity position of the company was not bad in any of the two years, but in 2010 the per unit current asset available for per unit current liability had decreased. The company’s cash is hand was very high in 2010. Which enhanced the company’s cash position ratio in 2010. Among the ratios calculated, profitability ratios are the simplest.Little financial knowledge is necessary for understanding the profitability ratios.As the profitability ratio; gross margin, operating margin, net margin, EPS, ROA and ROE are calculated. Only the gross margin had increased in 2010 from 2009. The other probability ratios are highly dissatisfactory, especially the ROE. Turning the focus into the activity/solvency ratio also gave a similar picture as was captured from the profitability ratio. There was an increase in the average collection period either due to lose administration of the management or the company became liberal and loosed the credit policy. The efficiency level with which sales were generated in 2009 with the assets of the company fell abruptly in 2010. This again indicated the looseness of administration in using the assets of the company efficiently. From this, we can infer that the...
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...OF FINANCIAL STATEMENTS PROFITABILITY Pick n Pay Stores Limited Profitability Woolworths Holdings Limited Profitability Profitability Summary SEGMENTAL ANALYSIS ON PROFITABILITY Pick n Pay Stores Limited Segment Profitability Woolworths Holdings Limited Segment Profitability LIQUIDITY Pick n Pay Stores Limited Liquidity Woolworths Holdings Limited Liquidity Liquidity Summary EFFICIENCY Pick n Pay Stores Limited Efficiency Woolworths Holdings Limited Efficiency Efficiency Summary GEARING Pick n Pay Stores Limited Gearing Woolworths Holdings Limited Gearing Gearing Summary CASH FLOW ANALYSIS Pick n Pay Stores Limited Cash Flows Woolworths Holdings Limited Cash Flows WOOLWORTHS HOLDINGS LIMITED VS PICK N PAY STORES LIMITED: AN INVESTOR’S POINT OF VIEW CONCLUSION BIBLOGRAPHY AND REFERENCES INTRODUCTION After all transactions have been recorded in the financial system, a final trial balance is prepared at the end of the financial year that results in the preparation of the annual financial statements to indicate to all interested parties the financial results of the years activities and the financial position of the entity at the year-end date. Financial statements are used by the company to measure the effectiveness of the objectives set for the year against actual outputs. A number of methods exist to measure financial position, financial performance through profitability, liquidity and other ratios, analysis and...
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...otherwise the results will be misleading. There are four main methods of ratio analysis - liquidity, solvency, efficiency and profitability. If ratios of companies are to be compared it is important that the companies are in the same industry. It would be appropriate to compare HSBC ratios with other the ratios of other banks but not for example a construction company. Liquidity ratios These ratios should be used on a daily basis by management to monitor performance and manage cash flow risks. There are three types of liquidity ratio: * Current ratio - current assets divided by current liabilities. This assesses whether you have sufficient assets to cover your liabilities. A ratio of two for example shows you have twice as many current assets as current liabilities. * Quick or acid-test ratio - current assets (excluding inventory) divided by current liabilities. A ratio of one shows liquidity levels are high - an indication of solid financial health. * Defensive interval - liquid assets divided by daily operating expenses. This measures how long your business could survive without cash coming in. This should be between 30 and 90 days. A ratio that is specific to banks and therefore HSBC is the Liquidity Coverage Ratio (LCR) The Liquidity coverage ratio is designed to ensure that financial institutions have the necessary assets on hand to ride out short-term liquidity disruptions. Banks are required to hold an amount of highly-liquid...
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