The income statement shows that Gopher manufacturing has a gross profit margin of about 41 per cent. A lower than 50 per cent gp margin means that Gopher Manufacturing generates a low level of revenues to pay for its operating expenses and net profit. It also indicates that either the business is unable to control production and inventory costs (which can also be seen from the DIO), or the prices may be set too low. Moreover, the Net Profit Margin is a relatively low 7.7 per cent. This indicates the high Cost of Goods sold and may mean that the company is not keeping its operating expenses under control. If the Net Profit Margin goes any lower, Gopher Manufacturing might need to take on debt to pay its expenses.…
The next calculated ratio was rate of return on net sales. This was done by dividing net income by net sales. This ratio is simply showing us the percentage of each sales dollar earned as net income. In 2011, Company G’s ratio was 5.43%. By 2012, this rose to 6.35%. The industry average is 7.55 to 4.20%. At 6.35%, I would say Company G should have no concern in this category; they are above the median but below the high.…
Following up with our initial analysis last week, NewGen had the opportunity to review CanGo’s financial statement. The success of a business depends on its ability to remain profitable over the long term, while being able to pay all its financial obligations and earning above average returns. NewGen leveraged our knowledge of Investment rations, breaking our analysis down into four (4) key areas, efficiency, financial leverage, liquidity and profitability. Attached you will find our financial analysis summary matrix.…
COTTE CORPORATION | | Income Statement | | For the Year Ended December 31, 2009 | | | | | Sales | $11,000,000 | | Cost of goods sold | $5,184,000 | |…
3-6 Gardial and Sons has a ROA(return on assets) of 12%, a 5% profit margin and a return on equity equal(ROE) to 20%.…
The table focuses on the profitability, the asset management and the leverage of Cintas Corporation. First lets focus on Cintas Corporation’s profitability. Cintas has steadily improved from 2009 to 2011. Profit Margin for Cintas has increased by .5% from 2009 to 2011. From 2009 to 2011 Cintas has increased its revenues, which is usually a good thing, but they have also allowed expenses to increase. Their profit margin was able to increase because Cintas increased revenue at a greater rate than their expenses. Cintas has also improved their return on equity from 2009 to 2011. Cintas return on equity improved by 1.17%. Growing return on equity is vital for Cintas profitability. The growing return on equity shows investors that Cintas could be a good company for their investment. With more investments come more opportunities for Cintas to increase revenue and profitability. The last ratio under profitability is return on assets. While profit margin and return on equity increased, return on assets decreased. Cintas return on assets decreased by .41% from 2009 to 2010. This is not good for Cintas. When Cintas return on assets decreased it means that Cintas did not do a good job of converting its assets or investment into profits for their company. This may have occurred because Cintas did not do a good job of using it’s investments and placing them in the correct areas that would benefit profits the most. Overall, Cintas profitability improved over the three-year span. One recommendation to help return on assets would be to figure out which area of the company needs the most investment and will give you the better return on your investment or assets. This could involve some type of analyst of each individual segment of…
Basis: Gateway, Inc. is indisputably in a lot of trouble. The personal computer industry is highly competitive in nature, and the depressed margins seem to be too much for Gateway to bear. My recommendation to buy the stock comes strictly from their cash per share value and expectations of the personal computer market. I believe that the PC market will begin to pick up steam near the end of this year, as many analysts expect. When this occurs, we should see some gains in GTW stock. I feel that the stock should rebound to around $1 above the cash per share value. Of course if they don’t get their costs under control, the margin based on cash per share, would begin to rapidly evaporate.…
As Tim was informed about new business around his coffee shop, he is expecting that sales should increase. Tim needs too to create a pro forma income statement to be able to plan and look at his future projections in his business operations to see if the projections determine a profit or a loss. If need be he can make operational changes such as increasing prices or decreasing costs before these projections become reality that way he can prepare for the potential increase in sales.…
If a business wants to succeed they have to make profit. Because if they do not make any sort of profit then their business will not succeed. If Hannah wants to succeed in her business then she must make profit in order to survive in the outside market and if she doesn’t make that much profit then her business is in trouble she can go in debt or even lose his business as it won’t exist anymore. So Hannah needs to know about the two main types of profit which is gross profit and net profit these are very important for Hannah’s business.…
NeedsLease is renting a space for its corporate office from HasSpace by entering into a lease agreement. The agreed lease term is for 10 years and there is no option to renew nor is the ability to negotiate renewal of the term. According to ASC 840 (5F of statement 13), the lease is classified as operating lease. The agreement includes two provisions that may require NeedsLease to perform certain activities at its cost. The first provision requires that the lessee, NeedsLease, may have to perform general repairs and maintenance on the leased premises. The second provision requires that NeedsLease may have to remove all the leasehold improvements and revert the…
Before adjustment, Nuware showed a much better financial performance than that of R.P Stuart regards to net income, gross profit margin, return on asset & equity, and EPS growth etc. After making necessary adjustment, we found that Nuware still outperforms R.P.Stuart, but with a smaller margin. The real net income is only 71% of the original figure, which subsequently lowered the return on assets and equity. But due to the higher leverage ratio, Nuware’s…
Non-current assets would increase by £100 million, cash would decrease by £50 million, and noncurrent liabilities would increase by £50 million.There would be no change to the book value of…
Howard Wagner is the thirty-six year old son of Frank Wagner, Willy’s former boss, Howard now occupies the same position as his late father. Although Willy was the one who named Howard, Howard is forced to fire Willy for his erratic behavior. He felt Willy was a good sales man in his time, however Willy's desperation and decline in standard of work lead to Howard finding him embracing and a liability and so he found himself having to fire him.…
Unitron Corporation The RSV method has a number of twists that can result in many different unit costs for the five Question 1 products. For inventory costing purposes, any The idea here is to construct a "Produced systematic cost allocation system will do. The basic As/Sold As Matrix" (400,000 x 400,000). Obviously, idea of the relative sales value scheme is that all sales the possible combinations are endless, so how does one should show gross margin percent equal to the average choose a "best" approach?…
[Sales Growth Rates, Sales, and Profits] Petal Providers Corporation opens and operates “mega” floral stores in the U.S. The idea behind the super store concept is to model the U.S. floral industry after its European counterparts whose flower markets generally have larger selections at lower prices. Revenues were $1 million with net profit of $50,000 last year when the first “mega” Petal Providers floral outlet was opened. If the economy grows rapidly next year, Petal Providers expects its sales to growth by 50 percent. However, if the economy exhibits average growth, Petal Providers expects a sales growth of 30 percent. For a slow economic growth scenario, sales are expected to grow next year at a 10 percent rate. Management estimates the probability of each scenario occurring to be: rapid growth (.30); average growth (.50), and slow growth (.20). Petal Providers net profit margins are also expected to vary with the level of economic activity next year. If slow grow occurs, the net profit margin is expected to be 5 percent. Net profit margins of 7 percent and 10 percent are expected for average and rapid growth scenarios, respectively.…