PREMIER INVESTMENTS 3.0 Profitability These ratios measure Premier Investments capability to generate profit. If these ratios are the same or greater than the previous period, higher relative to a competitor’s ratio, or similar to industry ratios, it shows that the company is performing well. Return on Equity The profit or loss earned in utilizing the investment of owners. Over this two year time period, Premier Investments watched their return drop 4.89% from 9.24 to only 4.35%. This had a very negative effect on Premier Investments and their shareholders as they received a very little percentage of return in 2011.
An integral part in performing a horizontal analysis is the ability to see the variation from one period to the next which are called trends (Horizontal analysis, n.d.). . Within the income statement, net sales increased by 33.3%, $150k, from Year 6 to Year 7. Then, a drastic decrease of 15% which is roughly $900k, took place from Year 7 to Year 8. The 33% increase showed the strength of the company, but the huge drop in sales demonstrated how Competition Bikes, Inc. (CB) struggled to attain a surge in its revenue which is the result of the 15% decline in sales caused by economic situations.
We see this again from 2004 all the way to 2010 with unemployment increasing to 10%. We can see that the economy hits a recession after roughly 10 years of gradual expansion. Okun’s Law states that for every 1% rises in Unemployment, GDP decreases by roughly 3%. The above Scatter Plot chart shows data from 1981 to 2010 and we can see that for every 1% rise in Unemployment over this period, GDP dropped by 0.4%. This shows a negative slop and that the relationship is relatively weak due to the fact the GDP has decreased by less than 1%.
There are two views of unemployment known as the classical and Keynesian view. Unemployment rates (which are the percentage of the working population unemployed) vary significantly from country to country with some as low as Belarus’ at 1.0% (2009 est. )(CIA World Factbook) and some as high as Zimbabwe’s at 97% (2009 est. )(CIA World Factbook). The UK’s current level of unemployment is at 2.62 million (BBC News Business, 16th Nov 2011) which has remained high since the global downturn at the end of 2008.
1. Does the Audi division of Volkswagen appear to be achieving economies of scale, constant economies of scale, or diseconomies of scale? At first glance it would appear that Audi is experiencing diseconomies of scale. As diseconomies of scale occurs when a company experiences an increase in marginal cost when output is increased. Audi's global sales rose 8.3% to 1.58 million vehicles in 2013 however despite the increase in revenue, the net profit fell 7.7% ($5.57billion) and the operating profit margin fell to 10.1% from 11% the previous year.
Case: Manzana Insurance Background: Manzana Insurance is faced with losses in the last 2 quarters and declining profits over the last 5 quarters. There are many potential problems in the operations processes of Manzana Insurance. Firstly, the Turn Around Time(TAT) is high at an estimated 6-8 days compared to the competitor who had been maintaining a TAT of 2 days, and is now promising to bring it down to 1 day. Secondly, the Renewal Loss Rate has increased from 33% to 47% over the last quarter. Thirdly, there is uneven distribution of workload amongst underwriters.
Current macroeconomic issues 2.1 Steady growth GDP can be seen as “the total annual output of goods and services on which aggregate demand is spent” (Sloman, 2008, p.277); it can be calculated as the sum of consumer spending, investments, government spending and balance of import and export. 2.1.1 Current issue UK has a fluctuant GDP since 2009. There is both positive and negative growth in the recent years (Trading Economics, 2013). GDP of UK shrank by 0.3% at the end of 2012, which is mainly attributed to drop in mining and quarrying industry, after maintenance delays at North Sea oil field. Manufacturing is another sector that causes the negative growth in GDP; it has decreased by 1.5% than the year before.
An Analysis Of The 2001 Recession An Economic Analysis of the 2001-2002 Recession The recession is commonly defined as “Two or more consecutive quarters of a shrinking economy.” During the month of March 2001, the world’s largest economy - The United States of America - began experiencing a downturn, leading into a recession. (“Economists call it recession”). In comparing previous recessions that occurred, it appears that similar patterns exist also in the 2001-2002 recession. Such patterns start with increasing interest rates by the Federal Reserve Open Committee, proceeded by growth slowdowns, the fall of real output, and eventually the rise in unemployment. According to Robert E. Scott and Christian Weller, “further increases in real short - term interest rates herald a slowdown.” Further evidence that suggests a recession was on the horizon was information released from the National Bureau of Economic Research that states, “A peak marks the end of an expansion and the beginning of a recession.”(The Business Cycle Peak, March 2001.)
It continued to appreciate throughout the first nine months of 2007, hitting a 10-year high against the dollar in October 2007. By late 2007, it is recorded as $1=₩918 only. The dollar had fallen in value against the won, making Hyundai and Kia vehicles, more expensive in the United States. This means that vehicles sold in the U.S. for dollars are recorded at a lower value when translated back into won, which has hurt the financial performance of both companies. For Hyundai, the annual net profit of the company in 2005 was about ₩2349billion, but in 2006, despite