Concerning the management effectiveness ratios, PNRA is more effective in generating revenues and profit thanks to its equities than the industry in general. Indeed, the return on equity of the company is higher than the industry average, even though it experienced a small decrease between the year 2003, and 2006. During the year 2006, for every $100 of common equity, Panera bread has been able to generate $14.80 of income compared to $13.81 on average generated by the industry. However, in the same industry, Jack in The Box, and McDonald are a lot more efficient in generating income thanks to their common equity, with a return on equity ratio of 30.47%, and 22.93% respectively. This difference is mainly explained by the fact that McDonald and Jack In the Box have a higher debt to equity ratio. As they decided to finance their asset with a greater portion of debt than Panera Bread, they need less equity. This can also be explained by the fact that the net income of those two companies has grown in 2006 at a higher pace than the shareholders’ equity. Panera Bread is also more efficient in generating income thanks to the money it has to invest, with a return on asset ratio of 10.85% compared to the Industry average (6.77%).
Regarding the profit margin, the ratio has decreased by a little bit more than 15% between the FY 2003, and the FY 2006. The decline of the return on sales can be explained by the fact that the company has chosen not to increase the price of its products
• Net profit margin has been negative and no major patterns over the 9 year period on net profit since the trend of the industry is based mostly on economic factors, and whether or not they secure contracts. Due to high percentage of COGS they are only left with a net profit of $980 or
David Jones’ gross profit margin for the past three years has remained stable with minimal fluctuations. The following calculated figures are for the year 2010, 2011, 2012, and 2013; 39.73%, 39.10%, 37.50% and 37.8% respectively. Such an observation is desirable as it is indicative that the company is financially stable as it is generating enough income to cover its operating expenses and make savings. It suggests that the industry in which the company operates has not experienced drastic economic fluctuations that can affect the company’s cost of goods sold. However,
Although the company did show an increased gross profit of $8,255,000 with $6,358,000 less Net Sales in 2013 versus 2012, that increase is due to the reduction in product Cost of Goods Sold by $14,613,000. Since increases in product price will negatively affect sales, one of management’s primary goals is to keep prices stable. This objective is achieved through implementation of cost cutting programs, investing in more efficient equipment, and automation of more steps in the production process.
During the last two quarters of 1999-2000, the company has experienced increasing revenues but profit margin contraction. There is insufficient information disclosure in the financials to source the driving factor. However, the largest driver of sales is through its distributors and Bonny Doon’s EuroDoon products (Figure 2). From a P/L standpoint, we believe that the margin fluctuations can be ignored, with a view of focusing on strategic initiatives to maximize revenue and the quantity sold.
In addition to affecting profits by adjusting useful life and depreciation; key ratios will also be affected. The net profit margin can be influenced both ways to fit the purpose of business strategy. It could be increased to make it seem more profitable, or it can be influenced in a negative way to write off as much expenses as possible – if the year held disappointing results – in order to show next year more positively in comparison.
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).
To make further comment we need to investigate further by looking at industry, competitors and economy. There may be other factors causing this ratio to decrease such as a general decline gross margin profit in retail sector affecting all companies, high inflation causing less demand, increasing competition etc. We should do further investigation to make further comment.
Profitability ratios decreasing from 2005 to 2006 although the sales has increased substantially and the net income as well but not in the same percentage of increase due to the high reliance on debt as the interest expense increased as mentioned before.
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.
Net income is total revenues minus total expenses incurred to generate those revenues all within the same reporting period. Net income is calculated by the accrual accounting methodology meaning that the expenses incurred to generate revenues are reported at the same time the related revenues are reported. Both revenue recognition and expenses paid may not coincide with actual cash transactions. Net cash from operating activities, on the other hand, is not determined by accrual but by
Operating profit margin figures in the table above show the return from net sales. 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
In 2017, the firm had a higher percentage of cost of sales in term of revenue than 2016, the cost of sales was 30.11% which was higher than 2016 for 0.21%, that means the firm’s gross margin in 2017 (69.89%) will also lower than the gross margin in 2016 for 0.21%. Burberry had a higher net operating expenses in 2017. The net operating expenses was 55.63% which was higher than 2016 for 1.56%, that also lower the operating margin, therefore the operating margin for the firm has decreased from 16.02% to 14.26% (-1.76%).
Clearly, Net profit margin is decreased in 1994. In 1992 it was the highest then it is showing downward trend. It is the only cause which is lowering Return over Equity (ROE).