Kroger has greater ROA performance at 6.4% in comparison to 6.0%. However they do have a weaker profit margin at 2.0% vs. 2.4%. Kroger overpowers this profit margin weakness by displaying quicker asset turnover at 3.171 (Kroger) vs. 2.509 (Safeway). 3. Which company was the more profitable in 2004?
The ROE for Sepracor is 33.07%, which means that 33.07 cents of assets are created for each dollar that was originally invested. It measures how Sepracor is using its money. The higher the return on equity, the more funds available to be invested in improving business operations without having to invest more capital. Debt to asset ratio measures the company’s solvency, and the higher the ratio, the lower the borrowing capacity for the company. I would make an investment in the company’s 5% convertible bonds.
Planning and Measuring Performance for Costco Corporation Roger Scmidt MGT/521 February 25, 2012 Roberto Guzman Planning and Measuring Performance for Costco Corporation My week 3 Organizational Plan Assignment was the Costco Wholesale Corporation. I identified its current goals as 1) control costs by reduction of inventory and careful selection of high quality goods and services and careful expansion of its’ domestic market. To elaborate, Costco has been very successful at keeping costs down by minimizing waste and storage expenses with a rapid turnover of its’ inventory. This is at least in part due t0 its’ ability to sell high-demand goods and services for very low prices. Additionally, Costco has a goal of 3) maintaining its employee workforce, as high employee job satisfaction has translated into exceptional customer service and low employee turnover (Costco, 2012).
In this particular case, the consumer’s real income has increased as a result of the fact that the price of both black and white televisions and coloured televisions have fallen. This means the purchasing power of the individual has increased, as they are able to consumer more goods at the same level of income. We can use this graph to further explain both the income and substitute effect. As the price of Black and white and colour televisions fall, the
Once again if the president’s bonus is based off of net income, this situation is the most favorable for a high paying bonus and encourages stockpiling inventory to inflate net income. b. If the sales outlook for the coming three years were to increase to 30,000,000, the newly implemented system would prove valuable to B.E. Company. If production is kept the same, the company is predicted to sell every unit produced which would avoid a stockpile of inventory and also safeguarding an extra 5,000,000 units in ending inventory in case sales go above 30,000,000.
Ratio analysis for TRI illustrates conservative debt levels and ability to service additional debt. By borrowing $17,450,000 to invest in production equipment and technologies, liquidity ratios change little. Similarly, solvency ratios change little except for the free cash flow ratio, affected by capital expenditures but not offset by loan proceeds in the calculation. Profitability ratios will realize improvements; gross profit ratios will increase from reduced labor costs. Net income ratios benefit from improved gross profit calculations but also include increased interest and depreciation expense from the new loan and equipment, lowering net income.
Another way to improve the company’s working capital is by reducing costly expenses. According to Competition Bikes’ Comparative Income Statement, the company spent $3,662,837 on operating expenses from year 6 to year 8. Most of the cost was incurred for general and admin expenses. By reducing the cost of executive compensation, the cost of utilities, administrative salaries, or a combination of the three, Competition Bikes’ working capital can be greatly increased. A2b.
Explain your answers. a. If a firm in the industry wishes to increase total sales revenue (ignoring cost considerations), will it raise or lower its selling price? Why? The selling price would only increase because the absolute value of -2.5 is 2.5 which are greater than 1 meaning it is elastic and an increase in price leads to a reduction in total revenue.
In quite stark contrast to their liquidity and profitably, Elker has shown to be quite adept in managing their inventory and collecting receivables. Their days-in-inventory ratio is almost five days under the industry average. This formula is used to determine how quickly a company is converting their inventory into sales. A slower turnaround on sales may be a warning sign that there are problems internally, such as brand image or the product, or externally, such as an industry downturn or the overall economy. The fact that they are significantly under the industry average indicates that Elker is more effectively converting their inventory into profit.
Balance Sheet analysis shows the company has increased cash assets, significantly reduced debt, and added to stockholder value which makes Riordan financially strong and desired by investors. Income Statement analysis reveals that Riordan has successfully reduced certain costs, but profits are down from previous years. Riordan Manufacturing’s Accounting System requires a number of software modules which will integrate well and greatly reduce the labor intensiveness and nearly 3-week delay of month-end general ledger