Profit Margin Essay

G. Times-Interest-Earned Ratio: This ratio measures how capable Company G is to pay debt. An increment (31.12-35.17) puts Company G above industry quartile of 29.7/17.2/8.1. Times-Interest-Earned Ratio represents strength for Company G.

and measure the company’s ability to pay their short-term liabilities. In most cases higher the

Inventory turnover – increase of 634.9% at Dell against 202% at Compaq shows the competitive advantage if Dell in managing and maintaining its stocks

In the Table __ and Fig __, you can see how the company has been performing. The overall profitability of the company has increased. Profitability ratios have increased since 2010. In particular, Harvey Norman’s Gross Profit Margin saw a significant growth, it grew 44.7% since 2010. Operating Profit Margin saw a similar result, finishing with a ratio of 10.5 in Financial Year 2015. Harvey Norman’s Net Profit Margin (when positive), have been at best maximum and are further illustrative of the paper-thin margins typically associated with the retail sector. Investments of Return on Assets (ROA) and Return on Equity (ROE) were also substantial, comparing 2010 and 2015 there was a relative decrease in ROA and ROE which doesn’t make much of a difference if the Gross Profit Margin has a strong game. Thus, on the basis of the financial results over the last 6 years, shareholders would definitely be confident about investing in Harvey Norman, unless there is a decline in current asset and equity returns.

The paper illustrates that financial ratio analysis is an important tool for firm’s to evaluate their financial health in order to identify areas of weakness so as to institute corrective measures.

9. Debt service coverage = (Net Income + Interest + Depreciation) in Statement of Operations/ Interest + Principal Payments ($10 million assumed for this assignment)

When comparing the debt-to-assets ratio of McDonalds and Wendys, you have to divide the firms total liabilities by their total assets. Essentially, the debt-to-assets ratio is the primary indicator of the firms debt management. As the ratio increases or decreases, it indicates the firms changing reliance on borrowed resources. The lower the ratio the more efficient the firm will be able to

Apple profit margin was last updated September 2016 at a 19.24% increasing considerably from previous month which was had the poorest performance in the past 5 years as charts demonstrate blaming this occurrence due to the holiday seasons and major factors that contribute to their profit such as the release of new products.

As the creditors’ view, they prefer the high current ratio. The current ratio provides the best single indicator of the extent, which assets that are expected to be converted to cash fairly quickly cover the claims of short-term creditors. However, consider the current ratio from the perspective of a shareholder. A high current ratio could mean that the company has a lot of money tied up in nonproductive assets.

Microsoft Corporation’s profitability ratios: Figure 2. From 2012 to 2013, Microsoft Corporations profit margin increased roughly 5%, although there was a slight decrease from 2013 to 2014, the profit margin still increased nearly 2.5% overall. Their return on assets experienced a decrease of over 1% due to a sizeable increase in inventory on the books, similar to Apple Incorporated. Microsoft Corporation’s return on equity also decreased by nearly 1% between 2012 and 2014 due to sizeable increases in the amount of equity held in the company.

The coverage ratios use cash flow from operations in most cases. Coverage ratios are important to long term investors and creditors because of the nature of the ratios that show the availability of cash to pay for items that include long term debts and dividends as well calculating percentages of cash flow from operations to shareholders equity, and average number of common shares outstanding (Ibarra, 2009). In addition, it has been determined that the cash flow to total debt (a coverage ratio) can be used as one of the best indicators of financial distress (Jooste, 2007). In all coverage ratios, a high ratio and increasing trends is the best case scenario.

Debt ratio helps in comparing total assets and total liabilities. If you have more liabilities it means you have lesser equity and therefore an increased leverage position.

Look at the Core Competence of Dell What part has the Ecosystem played in Dell’s growth? What is happening now? KPI’s Conclusion

Michael Dell founded Dell in 1984 at the age of 19. Steve Jobs and Steve Wozniak designed Apple Computer on April 1, 1976. As both companies continue to grow they have contributed to a wide impact on competiveness and efficiency towards strategic goals.

Both Dell and HP are two strong players in PC industry which refers to an industry where companies produces PCs (desktops and notebooks), handheld devices (smart phones and tablets), and workstations. However, with growing global expansion, Dell and HP’s performance differs. Dell, once the world’s largest PC maker in 2001, has continually lost its market share to HP and Acer since 2007 (Guglielmo 2009). The cause is rooted in two differences of these companies: company diversifications and core competences. Therefore, how firms can continually survive in the PC business is more of an issue for Dell than for HP.