Analysis Of Ratio Analysis On Bata

9. Distinguish between gross profit margin, operating profit margin, and net profit margin and provide the formula for each ratio. (http://www.investinganswers.com/financial-dictionary/ratio-analysis/gross-profit-margin-2076)

The gross profit margin measures the amount of profits that a company generates from its operations without consideration of its indirect costs. Thehigher thegross profit margin, the greater the efficiency of a company’s operations (Besley & Brigham 2007). It means that the company is generating enough income to cover its operating expenses. On the contrary, a lower gross profit margin indicates that the business is not generating adequate income to cover its operating expenses.

Net Margin is the ratio of net profits to revenues of a company. It is used as an indicator of a company’s ability to control its costs and how much profit it makes for every dollar of revenue it generates. Net Margin is calculated using the formula: Net Margin = (Net Profit / Revenues ) * 100 Net margins vary from company to company with individual industries having typically expected ranges given similar constraints within the industry. For example, a retail company might be expected to have low net margins while a technology company could generate margins of 15-20% or more. Companies that increase their net margins over time generally see their share price rise over time as well as the company is increasing the rate at which it turns dollars earned into profits.

Comments: My main comparison here within the two companies was the cost of goods sold. Although General motors percentage are still low its shows they spend some of their revenue on making sure they spend a good amount on their products. Tesla show that it spends a higher percent on COGS but seem to also be negative when it comes to operating expense. In this case Tesla is not on the right track when it comes to keeping it business running. General Motors has a better structure in running their business, as the net income is positive.

The profitability ration in a financial analysis is the ability of the organization to generate a profit. This ratio looks at areas such as net income, revenue, gross profit, earnings before taxes and interest and operating profit to name a few. Profitability shows the bottom line numbers for a company and is the goal that most organizations strive for. Ratios examined were gross profit margin and net profit margins

Profit margin ratio is the ratio between net income and net sale. This ratio discloses the earning capacity of the business. Higher profit margin ratio ensures high return to the owner or shareholders. It also helps in the growth of the business. Profit margin ratio of Peyton Approved is 53.44%, which is excellent and shows that company is has a good prospects in terms of

This measures the relationship between net profits and sales of a firm. The net profit margin is indicative of management’s ability to operate the business with sufficient success not only to recover revenues of the period, the cost of merchandise or services, the expenses of operating the business and the cost of the borrowed funds, but also leave a margin of reasonable

Profit Margin: -This ratio relates the operating profit to the sales value (Walker, 2009). It tells us the amount of net profit per pound of turnover a business has earned.

Gross profit is defined as the difference between Sales and Cost of Sales. The gross margin (or gross profit ratio) expresses the gross profit as a proportion of net sales. The gross profit margin ratio measures how efficiently a company uses its resources, materials, and labour in the production process by showing the percentage of net sales remaining after subtracting the cost of making and selling a product or service. It indicates the profitability of a business before overhead costs. The higher the percentage, the more the business retains of each dollar of sales. So: the higher the gross profit margin ratio, the better.

Operating profit margin figures in the table above show the return from net sales[13]. However profit margin ratios are high enough for the 3 years, there is a fall from 12.86% to 11.26% during 2011-12. Sales revenue increases with a higher rate than gross profit so there is a poor

Used to determine the competitive strength and cost effectiveness of a company, the operating profit margin shows what percentage of a company’s revenue is left over after covering variable costs. It is the operating profit divided by the net sales. Essentially, the operating profit margin depicts how much a company makes on each dollar of sales.

Profitability ratios refer to the relative measure to what an actual created profit. Through these ratios the company is allowed to see how profitable the company. In addition it can serve as an examination of the overall performance of the company’s operations and how do these compare to past performances or other companies. The ratios in which accounting measures the profitability of a company are Profit Margin, Price over Earnings, Return on Equity and Return on

“In 1897 Tomas Bat’a introduced the "Batovka", a high quality, mass-manufactured, affordable shoe for working people. The shoe revolutionized many standards of the period by its simplicity, its style, its exceptional light weight and its affordability with a price reaching up to one-quarter or less than traditional shoes. The shoes became an instant success up to the most remote areas where they were it sold in unusual places for the time such as general stores, groceries, tobacconists, hardware stores, etc. People who had gone barefoot could now buy quality shoes at a price everyone can afford. Bata start exporting for the first time: Germany, the Balkans and the Middle-East. Demand for Bata shoes grow rapidly, offering quality, comfort at an affordable price and an unprecedented selection of styles. Custom duties are introduced in Europe in the midst of the great depression. Rather than increasing the price of its shoes, Bata builds factories outside of Czechoslovakia for the first time, Switzerland, Germany, England, France, Poland, Holland, the USA and India. More than factories, the satellites were complete company towns made after the Zlin model and including production lines, residences, sports facilities, schools, medical facilities

The company is making continuous investments in various marketing plans to re-position the brands in the minds of consumer as international premium lifestyle casual footwear brand in India. Following the success of these stores in India, the consumers’ perception for Bata as a mass market brand has changed, which has enhanced the brand image of Bata India among the young generation. Taking it forward the company should come up with new innovations in the sports segment in which Bata is still lagging behind. Sports shoe market in India is estimated to worth USD 5 billion and is expected to reach USD 13 billion by 2018, growing at 18% CAGR from 2012 through 2016. People are getting more aware about their well being thereby increasing the market for sports segment in India. So there is a large market share for the company to tap into by introducing its new models with cutting edge technologies in the sports

Moreover, Bata Company is engaged in building trust lies with the customer by implement the customer relationship management. If the customer is satisfied and loyal to their brand, the company will grow and give good returns to the investors which will further remunerate and motivate their employee. Customer relationship management also help the management level of Bata Company foresee the opportunities in the market growth and a rapidly expanding middle class. For this, they can systematically transform Bata into a completely customer centric organization to serve this new market.