Restaurant Analysis

4130 WordsOct 25, 200917 Pages
TABLE OF CONTENT 1. Introduction………………………………………………………..…………………3 2. Company Background………………………………………………..………………3 3. Business Analysis…………………………………………………….………………4 a. Profitability Ratios……………………………………………..……………..4 b. Liquidity Ratios………………………………………………..……………..6 c. Leverage Ratios……………………………………………………………....7 d. Activity Ratios………………………………………………………………..9 e. Shareholders’ Return Ratios………………………………………………….9 f. Contribution Analysis………………………………………………………10 g. DuPont Model of Financial Analysis...……………………….……………10 h. Break-even Analysis……………………………………….……………….11 4. Summary ……………….………………………………………..…………………11 5. Recommendations……………………………………………………..……………13 6. References…………………………………………………………………………..14 7. Appendices A. Bob’s…show more content…
It's what the shareholders "own". Shareholder equity is a creation of accounting that represents the assets created by the retained earnings of the business and the paid-in capital of the owners. A business that has a high return on equity is more likely to be one that is capable of generating cash internally. For the most part, the higher a company's return on equity compared to its industry, the better. Bob’s Restaurants return on equity for the eight years of 1997-2004 averages -2.55%, compares unfavorably with the restaurant industry standard of 12.99% Return on Sales (ROS). - A ratio widely used to evaluate a company's operational efficiency. ROS is also known as a firm's "operating profit margin". This measure is helpful to management, providing insight into how much profit is being produced per dollar of sales. As with many ratios, it is best to compare a company's ROS over time to look for trends, and compare it to other companies in the industry. An increasing ROS indicates the company is growing more efficient, while a decreasing ROS could signal looming financial troubles. Bob’s Restaurants return on sales for the eight years of 1997-2004 averages 2.11% compares favorably with the restaurant industry standard of 2.2% Net Profit Margin. - The net profit margin tells you how much profit a company makes for every $1 it generates in revenue or sales. Net Profit margins vary by
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