Accouting
PART B1
1.0 Profitable-financial ratio analysis
1.1 Profit Margin
Although the sales for both entities experienced an increase, Profit Margins are all decreased over the two years.The ratios for Oroton in both years is 20.5 cents and 22.2 cents respectively.The slightly drop is owing to the increasing cost of sales and operating expense. However, Oroton performed well under the difficult trading condition .Compared with Oroton,Country Road has a quite large sales reached up to 419812 million dollars due to the company strategy which was developing the new market and closed unprofitable stores but the profit is disproportionate smaller(21058M) and result in the profit margin are ony 5 cents and 5.7 cents over the two years.This indicates that the expenditure in the entity does not cost effectively .
Apparently , Oroton Group provides the greater profit margin than Country Road which indicates an efficient sales performance. Country Road should be recognised their heavy expenditure and concerned about taking measures to spend efficiently.
1.2 Return on assets
Oroton Group’s total assets as well as the earnings before interest and tax(EBIT) remain stable during the two years. Return on asset of 56.9 cent, which is considerately above Country Road (up to 4 times greater). This gives an indication of Oroton’s assets appears more profitable and business activities management is much more effective than that of Country Road.
Meanwhile, the low figures in return on assets of Country Road is concerned as a result oflarge amount of cash at hand and low EBIT.This entity held Cash and cash equivalents amount to 24 million in 2012 and 14 million in 2011,much more than their competitor Oroton.However the average yield at balance date was only 3.83% per annum which indicates that they can not generated an expected return on cash. Furthermore,although Country Road’s sales revenue increased while the operating expense still offset the large part of the EBIT because of
1.0 Profitable-financial ratio analysis
1.1 Profit Margin
Although the sales for both entities experienced an increase, Profit Margins are all decreased over the two years.The ratios for Oroton in both years is 20.5 cents and 22.2 cents respectively.The slightly drop is owing to the increasing cost of sales and operating expense. However, Oroton performed well under the difficult trading condition .Compared with Oroton,Country Road has a quite large sales reached up to 419812 million dollars due to the company strategy which was developing the new market and closed unprofitable stores but the profit is disproportionate smaller(21058M) and result in the profit margin are ony 5 cents and 5.7 cents over the two years.This indicates that the expenditure in the entity does not cost effectively .
Apparently , Oroton Group provides the greater profit margin than Country Road which indicates an efficient sales performance. Country Road should be recognised their heavy expenditure and concerned about taking measures to spend efficiently.
1.2 Return on assets
Oroton Group’s total assets as well as the earnings before interest and tax(EBIT) remain stable during the two years. Return on asset of 56.9 cent, which is considerately above Country Road (up to 4 times greater). This gives an indication of Oroton’s assets appears more profitable and business activities management is much more effective than that of Country Road.
Meanwhile, the low figures in return on assets of Country Road is concerned as a result oflarge amount of cash at hand and low EBIT.This entity held Cash and cash equivalents amount to 24 million in 2012 and 14 million in 2011,much more than their competitor Oroton.However the average yield at balance date was only 3.83% per annum which indicates that they can not generated an expected return on cash. Furthermore,although Country Road’s sales revenue increased while the operating expense still offset the large part of the EBIT because of