Compare and analyze ratios of two companies.
Homework Answers
Company A has a better profitability ratio due to higher profitability margins compared to company B.
Company B has a better return for the shareholders of the company then compared to company A.
Return on Equity = Net Income/Total Equity.
Return on asset = Net Income/Total Assets.
As it has a high net income compared to its total equity and the total assets.
It shows that Company A is unable to provide the benefit of higher profitability margins to shareholders. It can be due to high debt financing. High debt financing decreases the net income of the company due to the payment of regular interest.
Company A is better for lenders like banks or creditors. As it is
able to service its debt due to high profit margins.
Company B is better for investors point of view as it provides a better return to shareholders.
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Compare and analyze ratios of two companies.
Profitability ratios Dec 31, 2018 Return on Sales Gross...
Evaluate the profitability (Dollars) and profitability ratios (%) of both companies for FY 2016, 2017 and...
Evaluate the profitability (Dollars) and profitability ratios
(%) of both companies for FY 2016, 2017 and 2018, including: profit
margin (gross and net), return on assets and equity. What
conclusions can you draw from your analysis? Which company, if
either, is doing a better job of generating profits and returns?
Keep in mind that investors focus on a company’s profit growth
& consistency.
2017 2018 Average 55% $ 55% $ 16% $ 10% $ $ $ $ 55% 16% 8%...
Profitability ratios reflect the net result of all the firm's erect. B policies and operating decisions....
Profitability ratios reflect the net result of all the firm's erect. B policies and operating decisions. The profitability ratios include the: (1) Operating profit margin, (2) Net profit margin, (3) Return on total assets (ROA), (4) Basic earning power (BEP) ratio, and (5) Return on common equity (ROE). The operating profit margin indicates what percentage of sales remain after et B are accounted for. It is a measure of the firm's operating effidency. Its equation is: B. It measures the...
Compare and analyze ratios of two companies. Market Ratios Dec 31, 2018 Price to earnings (P/E)...
Compare and analyze ratios of
two companies.
Market Ratios Dec 31, 2018 Price to earnings (P/E) Price to operating profit (P/OP) 30.47 22.54 6.15 Price to sales (P/S) Price to book value (P/BV) 11.55 | Dec 29, 2018 Price to earnings (P/E) 13.01 16.10 Price to operating profit (P/OP) Price to sales (P/S) 2.52 Price to book value (P/BV) 11.21
Please take a look below at the two companies' financial ratios. Identify the industries these two...
Please take a look below at the two companies' financial ratios. Identify the industries these two companies operate in. Please include good quality analysis and arguments (e.g. this ratio indicates that... and that ratio indicates the other,... and taken together these ratios indicate that.... (and so forth)) : Company A Company B P/E Ratio: 30 Price/Sales: 6 Price/Book Value of Equity: 7.5 Profit Margin: 20% Operating Margin: 25% Return on Assets (ROA): 6% Return On Equity (ROE): 25% Current Ratio:...
2018 Average 62% (data in millions) 2016 Coke $ % Net Operating Revenue/Net Sales $ 41,863...
2018 Average 62% (data in millions) 2016 Coke $ % Net Operating Revenue/Net Sales $ 41,863 Gross Profit $ 25,398 Operating Income $ 8,657 Net Profit (Consolidated Net Income) $ 6,527 Total Assets $ 87,270 Equity $ 23,220 Return on Assets 7.48% Return on Equity 28.11% $ $ 61% $ 21% $ 16% $ $ $ 2017 % 35,410 22,155 7,599 1,248 87,896 18,977 1.42% 6.58% $ $ 63%$ 21% $ 4% $ $ $ 63% 27% 20% 23% 13%...
Ratios Analyzing Firm Profitability The following information is available for Jay Company: Annual Data 2019 2018...
Ratios Analyzing Firm Profitability The following information is available for Jay Company: Annual Data 2019 2018 Net sales $9,000,000 $8,200,000 Gross profit on sales 3,050,000 2,736,000 Net income 567,600 500,000 Year-End Data Dec. 31, 2019 Dec. 31, 2018 Total assets $6,500,000 $6,000,000 Stockholders’ equity 5,000,000 3,200,000 Calculate the following ratios for 2019: Note: Round answers to one decimal place, unless otherwise noted. a. Gross profit percentage b. Return on sales c. Asset turnover (Round answer to two decimal places.) d....
Profitability ratios: Cisco Systems has total assets of $35.594 billion, total debt of $9.678 billion, and...
Profitability ratios: Cisco Systems has total assets of $35.594 billion, total debt of $9.678 billion, and net sales of $22.045 billion. Their net profit margin for the year was 20 percent, while the operating profit margin was 30 percent. What are Cisco’s net income, EBIT ROA, ROA, and ROE?
Kindly, correct me if I am wrong. Income statement (represents profitability in period of time) Sales...
Kindly, correct me if I am
wrong.
Income statement (represents profitability in period of time) Sales (Revenue) Total sales Cost of goods sold (COGS) Gross profit SALES - COGS Depreciation (operational cost) (x) Selling & admin expenses (operational cost) Operating profit (net income) Gross profit - (X+Y) Interest expenses (interest) Earnings before Taxes Operating profit - interest Taxes (TAX) Earnings after Taxes EBT-TAX Ration Analysis Liquidity Ratio: ► Ability to meet short term immediate obligations ► Current Ratio (C.R) =...
Annual Data Net sales Gross profit on sales 2019 2018 $9,000,000 $8,200,000 3,050,000 2,736,000 567,600 500,000 Net inc...
Annual Data Net sales Gross profit on sales 2019 2018 $9,000,000 $8,200,000 3,050,000 2,736,000 567,600 500,000 Net income Year-End Data Total assets Stockholders' equity Dec. 31, 2019 Dec. 31, 2018 $6,500,000 $6,000,000 5,000,000 3,200,000 Calculate the following ratios for 2019: Note: Round answers to one decimal place, unless otherwise noted. a. Gross profit percentage b. Return on sales C. Asset turnover (Round answer to two decimal places.) d. Return on assets e. Return on common stockholders' equity (Jay Company has...
3. Compute the return on sales (ROS) for Nike for 2018. 4. Compute the gross margin...
3. Compute the return on sales (ROS) for Nike for 2018.
4. Compute the gross margin for Nike for 2018.
7. Compute the return on assets (ROA) for Under Armour for
2018.
8. Compute the return on equity (ROE) for Under Armour for
2018.
9. Compute the return on sales (ROS) for Under Armour for
2018.
10. Compute the gross margin for Under Armour for 2018.
11. compute the operating margin for Under Armour for 2018.
12. Compute the Total...
Evaluate the profitability (Dollars) and profitability ratios
(%) of both companies for FY 2016, 2017 and 2018, including: profit
margin (gross and net), return on assets and equity. What
conclusions can you draw from your analysis? Which company, if
either, is doing a better job of generating profits and returns?
Keep in mind that investors focus on a company’s profit growth
& consistency.
2017 2018 Average 55% $ 55% $ 16% $ 10% $ $ $ $ 55% 16% 8%...
Profitability ratios reflect the net result of all the firm's erect. B policies and operating decisions. The profitability ratios include the: (1) Operating profit margin, (2) Net profit margin, (3) Return on total assets (ROA), (4) Basic earning power (BEP) ratio, and (5) Return on common equity (ROE). The operating profit margin indicates what percentage of sales remain after et B are accounted for. It is a measure of the firm's operating effidency. Its equation is: B. It measures the...
Compare and analyze ratios of
two companies.
Market Ratios Dec 31, 2018 Price to earnings (P/E) Price to operating profit (P/OP) 30.47 22.54 6.15 Price to sales (P/S) Price to book value (P/BV) 11.55 | Dec 29, 2018 Price to earnings (P/E) 13.01 16.10 Price to operating profit (P/OP) Price to sales (P/S) 2.52 Price to book value (P/BV) 11.21
2018 Average 62% (data in millions) 2016 Coke $ % Net Operating Revenue/Net Sales $ 41,863 Gross Profit $ 25,398 Operating Income $ 8,657 Net Profit (Consolidated Net Income) $ 6,527 Total Assets $ 87,270 Equity $ 23,220 Return on Assets 7.48% Return on Equity 28.11% $ $ 61% $ 21% $ 16% $ $ $ 2017 % 35,410 22,155 7,599 1,248 87,896 18,977 1.42% 6.58% $ $ 63%$ 21% $ 4% $ $ $ 63% 27% 20% 23% 13%...
Kindly, correct me if I am
wrong.
Income statement (represents profitability in period of time) Sales (Revenue) Total sales Cost of goods sold (COGS) Gross profit SALES - COGS Depreciation (operational cost) (x) Selling & admin expenses (operational cost) Operating profit (net income) Gross profit - (X+Y) Interest expenses (interest) Earnings before Taxes Operating profit - interest Taxes (TAX) Earnings after Taxes EBT-TAX Ration Analysis Liquidity Ratio: ► Ability to meet short term immediate obligations ► Current Ratio (C.R) =...
Annual Data Net sales Gross profit on sales 2019 2018 $9,000,000 $8,200,000 3,050,000 2,736,000 567,600 500,000 Net income Year-End Data Total assets Stockholders' equity Dec. 31, 2019 Dec. 31, 2018 $6,500,000 $6,000,000 5,000,000 3,200,000 Calculate the following ratios for 2019: Note: Round answers to one decimal place, unless otherwise noted. a. Gross profit percentage b. Return on sales C. Asset turnover (Round answer to two decimal places.) d. Return on assets e. Return on common stockholders' equity (Jay Company has...
3. Compute the return on sales (ROS) for Nike for 2018.
4. Compute the gross margin for Nike for 2018.
7. Compute the return on assets (ROA) for Under Armour for
2018.
8. Compute the return on equity (ROE) for Under Armour for
2018.
9. Compute the return on sales (ROS) for Under Armour for
2018.
10. Compute the gross margin for Under Armour for 2018.
11. compute the operating margin for Under Armour for 2018.
12. Compute the Total...
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