Ratio Analysis of Domino's Pizza Essay

FIRM’S PERFORMANCE EVALUATION  OPERATING Papa John’s performance in business operation in the year 2013 and 2014 depicts that it has had a decrease on net profit margin of -9.43 meanwhile Dominoes has had only a decrease of -3.20. This financial statement illustrates that the operation has done something that customers are not satisfied with. Based upon reviews online for Papa Johns’ they have had a lot of complains on wrong orders and rude staff (John's, 2016); due to this fact many of their potential customers choose an alternative pizza restaurant instead like one of its leading competitor the Dominoes.

Profitability ratios show a company's overall efficiency and performance. To measure the profitability of Polish Fine Foods I will use 3 ratios. First ratio is gross profit margin. The gross profit margin looks at cost of goods sold as a percentage of sales. This ratio looks at how well a company controls the cost of its account and the manufacturing of its products. The larger the gross profit margin, the better for the company. To calculate the gross profit margin I need to divide the gross profit by the sales and then time it by 100 to find the percentage. So, to find the gross profit margin for Polish Fine Foods I have to divide £45900 by £145400 and this would give me the answer £0.3156. To find out the percentage, I now need to multiply it by 100 and the answer is 32%. The gross profit margin for Polish Fine Foods is used to compare how much value is added to an item in between being bought in as stock or materials and being sold by the business. A low gross profit margin could show that there are high stock costs or maybe that retail price is being too low. If the business has a high gross profit margin then

From above, we see that sales grew at an average of 11.15% and EBIT at 9.03%. Coinciding this, is an average capital expenditure of 9.90%. Let us now look at the second period.

The operating margin ratio, also known as the operating profit margin, is a profitability ratio that measures what percentage of total revenues is made up by operating income (myaccountingcourse.com, 2017). The operating profit margin of Outdoors PLC in 2011 was 7.3% which went a slight down in 2013 by 0.3%. Operating profit margin of Outdoors PLC in 2015 was 7.8% with an overall increase over the 5 years’ period of 0.5%. The reasons for this increase might be an increase in gross profit margin which can either be because of sales revenue gone up or cost of goods sold declined and/or a decrease of operation costs (Marketing, other operating expenses etc..) over the 5 years. In general terms, normally a company should have approximately 25%

This decision increased SNC’s EBIT by approximately 200,000. Although SNC’s sales and EBIT figures increased, their net working capital and profit margins will remain at current figures.

It can be seen that operating profit margin has increased from 2010 to 0.19% in 2011. In other words £0.19 is operating profit is earned on every pound of sales. There is a huge difference in numbers when compared to the industry average. There is a need of introducing new sales strategies to improve sales and profit and make their position better in the industry. To attract potential investors operating profit margin needs to be improved.

There is no significant increase or deduction in terms of financial performance. There is a slightly downturn showing in the franchising sales revenue from 5.19bn to 5.08bn contributed by almost the same amount of outlets. Basic earnings per share have increased from 21.78c to 23.75c whilst a decrease of 2c in dividend per share compared with 2010.

The 50% increase of the cost also makes gains profit but not as much as the projection of 90% books sold. Because of the increase of the COGS, expenses have indeed gives a direct effect in regards to capitalization. Thus, gains were diminutive than that from the 90% increase of COGS.

sales up was 0.3%. The Gross margin was also up 70bps and the headline profit before tax

This would suggest they didn’t retain any income and any expansion would incur additional long term debt for the company. The increase in both company’s gross profit and net income, however, signals a favorable profit trend.

Net profit is obtained when operating expenses; interest and taxes are subtracted from the gross profit. Net profit margin ratio is measured by dividing profit after tax by sales:

Net profit ratio indicates the remaining profit after all types of operating expenses have been deducted from sales. This type of ratio shows the overall efficiency of the business. It indicates a company’s net income per pound of sales. Net profit ratio is expressed as a percentage [1].

Net profit margin is one of the profitability ratios and an important tool for financial analysis. It is the final output any business is looking out for. Net profit ratio is a

in 2007 remained relatively high at 24.4% and 54.3%, respectively. Profit from operations was 124,068 million and maintained a rapid and steady growth. EBITDA, profit attributable to shareholders and

CONTENT CHAPTER PAGE 1.0 INTRODUCTION 3 1.1 Company Profile 3 1.1.1 Hup Seng Industries Berhad 3 1.1.2 Hwa Tai Industries Berhad 3 1.2 Company Financial Position and Income Statement 4 1.2.1 Hup Seng Industries Berhad 4 1.2.2 Hwa Tai Industries Berhad 6 2.0 RATIOS ANALYSIS 8 2.1 Liquidity Ratios 8 2.1.1 Current Ratio 8 2.1.2 Quick (Acid-Test) Ratio 8 2.2 Activity Ratios 9 2.2.1 Inventory Turnover 9 2.2.2 Average Collection Period 9 2.2.3 Total Assets Turnover 10 2.3 Debt Ratios 11 2.3.1 Debt Ratio 11 2.3.2 Times Interest Earned Ratio 11 2.4 Profitability Ratios 12 2.4.1 Gross Profit