Profitability Profitability ratio is to measure the efficient of a business and profits generate by the business. High selling price and reduction in operating costs could show an improvement in profitability. There are 2 types of Profitability Ratios which will be discussed below, namely ; Gross Profit Margin and Return on Capital Employed. Gross Profit Margin Gross profit margin is a company's total revenue deduct its cost of goods sold divided by total sales revenue and stated as a percentage. A company's cost of goods sold means the expense related to raw materials, labor and manufacturing fixed assets which use to generate profit.
Profitability is the organization’s ability to generate profit from it resources. Company profitability is a key attraction for investors that would increase demand on company share and consequently increase the company share price. Profitability can be measured by return on assets “ROA”, return on equity “ROE” and net profit margin ‘Assessment of the profitability of a company is made on the basis of financial profitability ratios. The ratios measure economic effectiveness” (Rutkowska-Ziarko, 2014). ROA, is a financial ration that shows the company ability to generate profit out the used asset.
Return on Equity increased from 10.98% to 15.39%, showing that the firm is more profitable than before. Earnings per Share increased as well, as there were less shares outstanding with the repurchase while net income was unaffected. EPS increased from $0.91 to $1.04, another indicator that the leverage increased profitability. With the repurchase, Blaine’s D/E ratio increased, going from not having any debt at all to a D/E ratio of 11.48%, which is more inline with industry competitors. PE ratio fell as a result of the leverage.
Introduction Maximize the shareholders profit is the aim of all companies, despite the natural of the organizations or the size, by increasing the company share and directed all activities to that goal (Groth, et. Al., 1996), through performance measure tools. Q1 A : The definition of EVA and its advantages and disadvantages will be discuss. Traditional accounting based performance measures is not given a real picture of the organization performance (Biddle, et;al.1997), therefore there is a need to come with new measure tool which give the real financial performance of the company. EVA is تعريف EVA can be achieved through Economic Profit(EP) which is called as EVA as Stern and Stewart identified (A Ehrnbar, 1998), which
2.2.3 Retained earnings Anil and Kapoor (2008) conducted a study among Indian IT-companies and the data was collected during the period 2000-2006. The authors used five company factors in order to test the relationship with the company’s dividend payout ratio. The researchers found out that there is a positive but insignificant relationship between the dividend payout ratios and the companies’ profit (EBIT/total assets) and taxes. The results indicate that profit is not of major importance when an IT-company decides to pay dividends. However the results indicate that there is a strong relationship between cash flow and dividend payments.
While calculating the ratio, one must ensure that returns and refunds are backed out of total sales to make a precise measurement of the company’s assets' ability to market the sales. One of the simple ways to calculate average total assets is to add the initial and final total asset balances together and then divide them by two. This very method is based on a two-year balance sheet. A more in-depth, weighted average calculation can be used, but it is not essential. Let’s take a simple example to understand how the fixed asset ratio is calculated – Suppose, there’s a tech startup company that develops utility software for mobiles and tablets, it goes by the name of say, Indie tech.
3. Scope of the Project: Earned Value Analysis as a performance evaluation tool can be used for any construction project. This paper focuses on the Earned Value Analysis done on a real time project. The analysis helped the project perform better through the cost and schedule indices. 4.
Whether to issue dividends, and what amount, is determined mainly on the basis of the company's inappropriate profit (excess cash) and influenced by the company's long-term earning power. When cash surplus exists and is not needed by the firm, then management is expected to pay out some or all of those surplus earnings in the form of cash dividends or to repurchase the company's stock through a share buyback program. Dividend policy is one of the most widely researched topic in the field of finance , It is important for everyone working in the company as well as people who are investing upon it which are investors, managers ,lenders and for other stakeholders. The investor use dividend yield calculation to measure the amount of income received in proportion to the share price. Dividend policy is an important element in a corporation.
For example the return on equity, projected earnings and increasing earnings per share. Basically, we look into 4 criteria before we start investing in a company stock. First, we look at the history earning growth of a company. We need to evaluate and find a strong historical earnings growth based on the annual revenue and the performances of the company. We evaluated the earning per share at least 5 years to determine the position of the company in the market.
Equity: It is what the business owes to its owners. Equity equals to total assets minus total liabilities thus it represents the leftover interest in the business that belongs to the owners. In simple terms, equity is the financial value, or worth, of a company. For examples, Share capital represents the amount invested by the owners. Retained Earnings means part of the income is retained by the company instead of distributing to the shareholder as dividends.