Prepare an analysis of profitability as follows: Net Income Shareholders' Equity + Long-term Debt 1. Return...
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Prepare an analysis of profitability as follows: Net Income Shareholders' Equity + Long-term Debt 1. Return on capital employed (ROCE) = This measure indicates the profitability of the company relative to the book value of the total funds invested in the company 2012 2011 Earnings (p. 43) 650 769 Liabilities: - Current Liabilities = Term Liabilities 11,544 11,421 - 5.396 -4,718 6,148 6,703 + Shareholders' Equity 6.417 6.007 12,565 12,710 ROCE = % % 2. Return on Equity (ROE) = Net Income Shareholders' Equity 2012 2011 ROE 3. Return on Sales (ROS) = Earnings Revenue 2012 2011 Based on the work of Frederick Reichold, "One Number You Need to Grow," Harvard Business Review. December 2003. Page 3 9813в008 Earnings 650 769 Revenue 31,604 31,250 2012 2011 ROS % 4. Gross Profit Margin Gross Profit = Revenues – Cost of Merchandise + Inventories Sold 2012 2011 Revenues 31,604 31,250 23,894 Cost of Merchandise 24,185 Gross margin 7,419 7,356 Gross Profit Margin = Gross Profit Sales 2012 2011 Gross Profit Margin % 5. Asset Tumover = Revenue/Assets (times) 2012 2011 31,250 17,428 Revenue 31,604 Total Assets 17,961 2012 2011 Asset Turnover Liquidity Measures The liquidity of Loblaw can be viewed as its ability to pay its debts. 1. As a retailer, a critical indicator of liquidity is its ability to match consumer demand with selection and pricing as demonstrated by inventory turnover. Inventory tumover = Inventory Cost of Sales / 365 2012 2011 2007 2025 Inventory Cost of Sales 24,185 23,894 Thus 2007/24,185 - 365 2012 2011 Inventory Tumover _X Prepare an analysis of profitability as follows: Net Income Shareholders' Equity + Long-term Debt 1. Return on capital employed (ROCE) = This measure indicates the profitability of the company relative to the book value of the total funds invested in the company 2012 2011 Earnings (p. 43) 650 769 Liabilities: - Current Liabilities = Term Liabilities 11,544 11,421 - 5.396 -4,718 6,148 6,703 + Shareholders' Equity 6.417 6.007 12,565 12,710 ROCE = % % 2. Return on Equity (ROE) = Net Income Shareholders' Equity 2012 2011 ROE 3. Return on Sales (ROS) = Earnings Revenue 2012 2011 Based on the work of Frederick Reichold, "One Number You Need to Grow," Harvard Business Review. December 2003. Page 3 9813в008 Earnings 650 769 Revenue 31,604 31,250 2012 2011 ROS % 4. Gross Profit Margin Gross Profit = Revenues – Cost of Merchandise + Inventories Sold 2012 2011 Revenues 31,604 31,250 23,894 Cost of Merchandise 24,185 Gross margin 7,419 7,356 Gross Profit Margin = Gross Profit Sales 2012 2011 Gross Profit Margin % 5. Asset Tumover = Revenue/Assets (times) 2012 2011 31,250 17,428 Revenue 31,604 Total Assets 17,961 2012 2011 Asset Turnover Liquidity Measures The liquidity of Loblaw can be viewed as its ability to pay its debts. 1. As a retailer, a critical indicator of liquidity is its ability to match consumer demand with selection and pricing as demonstrated by inventory turnover. Inventory tumover = Inventory Cost of Sales / 365 2012 2011 2007 2025 Inventory Cost of Sales 24,185 23,894 Thus 2007/24,185 - 365 2012 2011 Inventory Tumover _X
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Related Book For
Introduction to Management Accounting
ISBN: 978-0133058789
16th edition
Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta
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