Purchase Solution

Gross Profit Margin and other ratios

Not what you're looking for?

Ask Custom Question

Scenario:

The Eddison Electronics Company (EEC) owns a wide variety of manufacturing companies that make sophisticated electronic controls. You are EEC's corporate business financial analyst. Your responsibilities include the following:

Creating and analyzing the monthly performance of each company within EEC.
Providing and analyzing costing information for each company within EEC.
Analyzing the major capital projects submitted by each company.

EEC has introduced a new 1.5GB computer memory chip. The following is the plan and first-year results of the 1.5GB chip project and the financial activity for 2006.

ASSIGNMENT:
Using the Library and other course resources, find a manufacturing company's annual report.

Calculate the following ratios for the company selected:

Return on Assets
Return on Equity
Gross Profit Margin
Debt/Equity Ratio
Debt Ratio
Current Ratio
Quick Ratio
Inventory Turnover
Total Asset Turnover
Price Earnings Ratio
Using the calculated ratios, analyze the financial performance of the firm. In a memo to the CEO, explain the ratios calculated. Also address other methods of analyzing financial statements besides ratio analysis. Lastly, explain your analysis of the firm, making recommendations for improvements.

Purchase this Solution
Solution Summary

This provides the steps to compute and analyze the Gross Profit Margin and other ratios

Solution Preview

I have selected the ConAgra Foods for the queries. In financial analysis, we need qualitative information and try to read between the numbers. We have to ask all the right questions. Over the years, there are some ratios, which have become more popular and handy for rule of thumb analysis of financial statements. Our purpose in this note is not deride them but to advice the reader to use them properly to derive the correct results.
Ratio analysis can also help us to check whether a business is doing better this year than it was last year; and it can tell us if our business is doing better or worse than other businesses doing and selling the same things. In other words it helps in inter firm and intra firm comparison.
(bized)

Investor's Perspective

Company who wants to invest into ConAgra will be interested in knowing about the profitability of the organization and the return that the it is giving to its shareholders. The following ratios will help in knowing the profitability and about the Return on its ...

Purchase this Solution
Free BrainMass Quizzes
Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

View More Free Quizzes
Related BrainMass Solutions

  • profitability ratios

    Net Profit margin S is located on the Income statement 5. Gross Profit Margin. Gross profit is found on the Income statement. It is the Sales - Cost of goods sold (COGS) 6.

  • ratios for profitability and riskiness

    This represents a time-tested method wherein the organization can utilize the following ratios to ascertain their profitability including Gross Profit Margin, Operating Profit Margin, Net Profit Margin, and Other Common Size Ratios.

  • Performance Factors

    A large amount of the cost of goods sold may cause the gross profit to fall, leading to a decrease in the gross profit margin. The ratio of profit margin on sales might also be useful in my analysis.

  • Managerial Accounting and Metrics

    Hi there, Here is some info on metrics: Gross Profit Margin: GP/Sales Remember: Turnover = Sales Gross Profit = Turnover - Cost of Sales The gross profit margin ratio tells us the profit a business makes on its cost of sales, or cost

  • Ratios/Pro-forma income

    Gross profit margin and net profit margin will determine the profit for the company's operation. Return on common equity will determine the return for the shareholders.

  • Four ratios for performing an audit

    Thus low inventory turnover indicates inefficient utilization of the inventory Net Profit The profitability ratios, indicates a company's financial health and how effectively the firm is being managed to earn a satisfactory profit and return on

  • Calculating Ratios of Financial Statements of Phone Corp.

    Gross Investment - What was Phone Corps gross investment in plant and other equipment?

  • Net Profit Margin and Other Ratios

    422370 Net Profit Margin and Other Ratios See the attachment for Daktronics' data and answer the following: Compute the following for 2005 and 2004: 1. Net profit margin Z. Total asset turnover (use year-end assets) 3.

  • Ratio

    Gross Profit margin = Gross Profit/Sales = 624,000/5,200,000=12.00% b. Net Profit Margin = Net profit/Sales = -296,000/5,200,000=-5.69% c.

  • Ratios and Income Statement

    What is the Net Profit Margin? d. What is the Gross Profit Margin? Please see response attached. I hope this helps and take care.

View More Related Solutions