When selecting a business to purchase shares of ownership you should be aware of its history. PECO one of the oldest and largest utility companies in the United States began its origins in The Brush Electric Light Business of Philadelphia, which was formed in 1881. Formerly known as Philadelphia Electric Business, it was incorporated in 1902. In 1994, Philadelphia Electric Business changes its name to PECO Energy Business, and later became PECO. PECO merged with Unicom to create Exelon in 2000. Exelon has been the top-ranked electric and gas utility on the FORTUNE 500 every year since 2008. Exelon was named to the Dow Jones Sustainability North America Index for the ninth year in a row in 2014 (Peco.com, 2015). However, most often …show more content…
Since the goal of your portfolio is to provide an income for you, we must view the profitability of the business. The most current Operating Margin for Exelon is 15.60% computes the percent of revenues after paying all operating expenses. The Operating Margin is the Operating Income divided by the Total Revenue. Operating Margin measures a business 's operating efficiency and suggests how much a business makes before interest and taxes on each dollar of revenue. The higher a business’s Operating Margin is the better the business outlook. Furthermore, in conjunction to considering Operating Margin, you would also consider Net Profit Margin. Exelon most current Net Profit Margin is 8.61%. Net Profit Margin is the Income after taxes divided by Total Revenue for the same interval of time. It is used to report the cost-effectiveness. A business that is growing its net earnings or reducing its costs is alleged to be improving. Net Profit Margin is expressed as the business “bottom line.” The bottom line also refers to any activities that may increase or decrease net earnings or a business’s overall profit (Investopedia, 2015). Therefore, too measure the Exelon’s bottom line; you must have knowledge of their financial strength. The first ration to consider is the Quick Ratio. The Quick Ratio computes a business’s capability to meet its short-term debts with its liquid assets. It gauges the dollar amount of liquid assets available for each
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.
A typical Gross profit margin depending on the industry may be 25 to 30%. Nucor’s Gross profit margin ratio indicates that industry is intense and cost of goods is one of the main of factor in profitability. After examining the five year
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.
Liquidity is important for any firm as it is an assessment of the ability to pay its' liabilities in the short term. There are two main liquidity ratios: the current and the quick ratio. The current ratios divides the current assets by the current liabilities to assess how many times the current assets can pay the current liabilities (Elliott and Elliott, 2011). Traditional ratios are usually in the region of 1.5, but this may vary depending on the industry and nature of the business (Elliott and Elliott, 2011). The current ratio is shown in table 1.
The Consolidated Operating Margin for April resulted in a gain of $699K or a 5.6% margin. The operating margin variance was favorable by $116K when compared to the budgeted operating margin gain of $583K or 5.0%. The leading indicator for April’s better than budgeted performance was higher than budgeted Patient Revenue and a favorable payor mix.
In terms of industry profitability, it appears that profit margins have a tendency to fall. This is because competition is high and customers tend to buy low-priced high-value items. The average gross margin and net profit margin is 37.1% and 14.3%, respectively (MSN Money, 2010).
This ratio is similar to current ratio, except that it excludes inventory from current assets. Inventory is subtracted because it is considered to be less liquid than other current assets, that is, it cannot be easily used to pay for the company’s current liabilities. A company having a quick ratio of at least 1.0, is considered to be financially stable. It has sufficient liquid assets and hence, it will be able to pay back its debts easily (Qasim Saleem et al., 2011).
The Quick Ratio also known as Acid Ratio is used by firms to determine liquidity position. It explains if the firm is able to pay all of their current debt liabilities. (Dyson, 2010) The graph above illustrates that over the period from 2007 to 2011 quick ratio was not more that 1, which means that their debts might not be covered all. The graph also indicates that a peak was in 2011.
During the period 2012 and 2013, the Operating profit margin decreased from 9.2% to 5.7%. This slight decline can be attributed to the decreased revenues and the increase in tax expenses.
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
These ratios help company in determining its capability to pay short-term debts. Liquidity ratios inform about, how quickly a firm can obtain cash by liquidating its current assets in order to pay its liabilities. General liquidity ratios are: current ratio and quick ratio. Current ration can be obtain by dividing company’s current assets by its’ current liabilities. Generally a current ratio of two is considered as good (Cleverley et al., 2011). Quick ratio also known as acid test determines company’s liabilities that need to be fulfilled on urgent basis. Quick ratio can be obtained by dividing quick assets by current liabilities. Quick ratio is considered as stricter because it excludes inventories from current assets. Generally a quick ratio of 1:1 is considered as good for the company. Higher quick
* Consolidated operating income was $ 503.9 million in fiscal 2008 and operating margin was 4.9% compared to previous year’s $ 1,054 million and 11.2% respectively.
A liquidity ratio calculated as (cash plus short-term marketable investments plus receivables) divided by current liabilities.