Accounting Ratios Term Paper - Grade: a

In all of these measures either Walgreens has stayed stagnant or had negative fallout from the previous year. Return on Asset is a ratio that measures how efficiently the company uses its assets. How much operating income the company generates given one dollar in asset. Walgreens went down from 15% to 11% compared to previous year. This shows a decline in the efficiency of the management. Walgreens needs to do a better job of managing its assets.

* Return on assets (ROA) – ROA shows how successful a company is in generating profits on the amount of assets they own. Since assets consist of debt and equity, ROA is a measure of how well a company converts investment dollars into profit. The higher the percentage, the more profit a company is generating per dollar of investment. Similar to ROS, this ratio needs to be looked at compared to the industry as different industries have different requirements that can affect ROA. For example, companies in the airline and mining industries need expensive assets to operate so will have lower ROA’s compared to companies in the pharmaceutical or advertising industries.

First of all, return on asset (ROA) is a ratio used to measure how efficient a company generates profit using its assets, which is the invested capital. We noticed that HH’s ROA was increasing from 2006 to 2010. However, HH’s ROA for 2011 dropped dramatically from 18.41%(year

The profitability ratio shows the ability for a company to generate profits. Ratios that are used calculating profitability of a company are return on assets and return on equity. The return on assets calculates the ability of a company to effectively use assets to generate income, the percentages per quarter in year one are; 76%, 22%, 34%, 37%. This shows profit during each quarter. In years two, three, and four the percentages are; 68%, 54%, 49%, 38%. These ratios show a slight decline but still a solid profit. The return on equity shows the amount of money earned per dollar investing into the company by shareholders. By quarter, year one return on equity is .81 .61 .28 .29, years two, three and four are all .32. These numbers show an above average return, the average return in the United States is between .10-.15, and over .20 is considered above average (Kennon, 2011.)

The Rate of Return on Total Assets is the ratio that shows the earnings of a company including

Return on equity measures a company’s profitability by calculating how much profit a company generates with the money shareholders have invested. It is important to consider ROE and not just net income in dollar term because it helps for making comparisons among different investment amounts.

Return on Assets shows the Company’s ability to generate a profit based on assets and equity. In 2009, the Company’s profit margin was 3.07% and in 2011 it had fallen to 1.91%.

American Eagle Outfitters, Inc. still continues to move forward in the business community. Sales are on the rise with an increasing focus on internal controls and management. This success was achieved with little dependence upon advertising. In a financial meeting shortly after the

The setting of a business compels most when there is a viable opportunity for the firm, organization or venture to succeed. It is in this pursuit for success that most firms are seeking the service off establishing and determining the performance of the firms. Measuring firm performance has several means of doing, however, the most commonly used one is the Return on Assets (Rumelt, 2011). Return on assets is a measurement methodology that assesses various factors and matrices in the line of action. However, most firms focus on the financial side of the venture, diverting their attention from the most compelling basis of the metric method. Return on assets is a tool that requires a critical and careful selection of the base criteria for measuring the success of the firm or company. However, focusing on the financial side only leaves the investors happy but the firm stagnating.

Staples, as one of the largest retail companies in the US, has experienced low growth rate in recent years. As shown from the historical data in Table 1, the annual real growth rate has been negative since 2010. Specifically, the compound annual growth rate (CAGR) from 1996 to 2016 is 5.66%, while the CAGR from 2006 to 2016 drops to -1.68%, and it decreases further to -7.33% from 2011 to 2016. This obvious comparison indicates that the future of Staples’ sales is not optimistic. Staples is now in the decline stage of its life cycle. The company’s year-over-year growth for each year from 1996 to 2016 is not very constant. In particular, sales growth was about 20% from 1996 to 2000, then it declined to 10% from 2001 to 2009, and declined further

This memo provides an analysis of two prosperous retailer companies in the United States: American Eagle Outfitters and the Buckle Company. We will help you determined which of the two company demonstrates the highest potential investment opportunity based on their financial statements for the current year. We will be discussing American Eagle Outfitters and the Buckle Company cost and book value of property and equipment, their depreciation method, the estimated useful lives for buildings, leasehold improvements, the future minimum lease obligations under operating leases, their return on assets, their profit margin, and their asset turnover ratio. We recommend to invest in the Buckle Company because it has a higher profit margin

This paper examines financial ratio analysis by defining, the three groups of stakeholders that use financial ratios, the five different kinds of ratios used and their applications, the analytical tools used in analysis, and finally financial ratio analysis limitations and benefits.

During this period, the Return on Assets increased from 5.7% in 2012 to 34.6% in 2013. This implies the number of cents earned on each dollar of assets increased from 2012 to 2013. This shows that the business has become more profitable. Equally, the Return on Equity also increased from 12.0% in 2012 to 46.5% in 2013. This similarly implies that the company in 2013 was more efficient in generating income from new investment. This, also can be attributed to the sale of the Digital Business Brand which enabled the company appraise its strategic plan.

Financial results and conditions vary among companies for a number of reasons. One reason for the variation can be traced to the characteristics of the industries in which companies operate. For example, some industries require large investments in property, plant, and equipment (PP&E), while others require very little. In some industries, the competitive productpricing structure permits companies to earn significant profits per sales dollar, while in other industries the product-pricing structure imposes a much lower profit margin. In most low-margin industries, however, companies often experience a relatively high rate of product throughput. A second reason for some of the

The results of the company’s return on assets ratio measuring profitability overall was 7.2% in 2010 and 8.1% in 2011 having an increase of 0.9%. Return of common stock ratio that portrays the