Analysis Of The Financial Ratios Of David Jones

Gross profit is defined as the difference between Sales and Cost of Sales. The gross margin (or gross profit ratio) expresses the gross profit as a proportion of net sales. The gross profit margin ratio measures how efficiently a company uses its resources, materials, and labour in the production process by showing the percentage of net sales remaining after subtracting the cost of making and selling a product or service. It indicates the profitability of a business before overhead costs. The higher the percentage, the more the business retains of each dollar of sales. So: the higher the gross profit margin ratio, the better.

Gross profit margin ratio will define an organizations financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold (Investopedia). The gross profit margin literally measures how much of every dollar of sales a company is able to actually keep (Answers, 2009).

After a profit announcement was made by David Jones Ltd, it is the objective of this report to note whether there was an impact of such information on investor behaviour via the share prices of this company. To ensure that the information found was accurate, the effect of the All Ordinaries was taken into consideration and comparisons were made between David Jones and its two main competitors. After analysing the closing share prices before and after the date of the announcement, it was found that share prices reduced more than that of the general stock market and also more than that of its main competitors. This report concludes that the announcement of accounting information by

Net profit margin ratios is sales into net income, a reflection of how well sales have done once you take expenses out of the equation.

GC3 financials show that they had a gross margin of $110,580 and went up to $111,922 in 2013 (Great Cups of Coffee, n.d.). From 2013 to 2014, you also see a decrease in long-term debt to equity ratio. When having a lower debt to equity ratio, demonstrates financial health for the company. Keeping a gross profit margin of 50% is every company’s goal (Smith, n.d.). Currently, GC3 has a gross profit that is less than the

Profitability ratios are used to assess a business’s ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For the majority of these ratios, a higher value relative to a competitor’s ratio or the same ratio from a previous period indicates that the company is doing well. The gross profit margin is a measurement of a company 's manufacturing and distribution efficiency during the production process. A company that boasts a higher gross profit margin than its competitors and industry is more efficient. KO has a gross profit margin of 63.86% compared to DPS’s 60.20%. I

It is noted in table no.1 that the gross profit margin has been increasing during the past four periods of time, starting from 30% in 2012 to 35% in 2015 this is related with the increment of sales, the higher the better and it means that the company has been doing a good strategy with prices. This indicates a financial success and means that the product is viable for the company.

Gross profit margin reflects the amount of revenue from sales that is left for profit and to pay other expenses after the cost of the goods sold is subtracted. This margin is roughly equivalent to the markup on a product and reflects the amount over cost the company is able to charge. Firms in retail can usually increase their gross profit margin if they can differentiate themselves from their competitors and charge a higher price for roughly equivalent products.

Gross profit margin is simply gross income (revenue less cost of goods sold) divided by net revenue. The ratio reflects pricing decisions and product costs. The gross margin for the company shows that % of revenues generated by the firm are used to pay for the cost of goods sold.

Financial ratios are calculation of numbers from the financial statements for a comparative analysis. A ratio in and of itself has little meaning but as a tool of comparison, internally, it reflects the company’s performance year to year, or externally comparing other organizations’ performance within the same industry. Ratios help to determine the company’s strengths, weakness, and risk. Credit analysis and investors also rely heavily on ratios (Baker & Baker, 2014).

Gross margins uncover what amount of an organization gains contemplating the expenses that it acquires for preparing its items or administrations. Gross margin is a great evidence of how beneficial an organization is at the most principal level, how effectively an organization utilization its assets, materials, and labor. It is typically communicated as a percentage, and demonstrates the productivity of a business before overhead expenses; it is a measure of how well an organization controls its expense. The blueprint for gross profit margin is gross margin/sales. Gross profit margin for Johnson & Johnson is 45,566,000/67,224,000 = 68%.

Financial ratios are "just a convenient way to summarize large quantities of financial data and to compare firms' performance" (Brealey & Myer & Marcus, 2003, p. 450). Financial ratios are very useful tools in order to determine the health of a company, help managers to make decision, and help to compare companies that belong to the same industry in order to know about their performance.

Gross Profit Margin (GPM) is calculated by Revenue - Cost of Goods Sold / Revenue. In 2013 GPM is 2% and in 2014 is -3%. GPM is used and measured to benchmark against other industry competitors, showing a negative result is the outcome of expenses exceeding the revenue amount. In 2014, expenses are $M15,792 and revenue is $M15,352 (Refer Appendix 1, pg.3). In 2013 GPM showed a 2% GPM, in this instance revenue is higher than expenses, $M15,902 v $M15,530 respectively (Refer Appendix 2, pg.7) To avoid a negative GPM costs must be cut to obtain the achieved level of GPM, alternatively revenue needs to increase or a combination of both. Air New Zealand had a GPM of 8.64% which is much higher than the 2013 Qantas result (Refer Appendix 3, pg.2).

Profitability ratios refer to the relative measure to what an actual created profit. Through these ratios the company is allowed to see how profitable the company. In addition it can serve as an examination of the overall performance of the company’s operations and how do these compare to past performances or other companies. The ratios in which accounting measures the profitability of a company are Profit Margin, Price over Earnings, Return on Equity and Return on

Gross profit ratio is a profitability ratio that measures the profitability of a company after deducting its cost. This is done by dividing revenue to the gross profit margin. High gross profit ratio means more cash available to pay the expenses and a probability of a higher profit for the company. Rolls Royce gross profit ratio increased from 2013 to 2014 while General Electric’s ratio decreased from 2012 to 2014. However, comparing both ratios of the companies, GE has a higher gross profit ratio for the three-year period than RR.