Premier Investments Efficiency and Profitability

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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. Return on Assets How much profit has been generated by using the given level of total assets; this results from the interaction of the profitability of sales with the rate at which sales occur. Premier investments again had a decrease, from 9.81% to 5.72. This drop of 4.09% means that they had a slight decrease in profit levels in 2011 compared to 2010. Net Profit Margin The relationship between the final profit and sales. It shows the percentage of sales income that remains after taking account of all expenses. Premier Investments had a significantly large loss within the time period from 16.11% to 9.54%. Such a large decrease, 6.57%, shows that after all expense the company made a lot less than last year. Gross Profit Margin represents the relationship between the gross profit earned for a period and the sales for the same period. Surprisingly, Premier Investments had a slight increase in gross profit margin. However, it was not noticeably large, only 0.42%. Asset Turnover Shows how effective an organisation is in generating income from its total investment in assets by relating sales revenue to the value of total assets. Asset turnover has remained completely stable only decreasing a slight percentage of only 0.01% from 0.61

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