Return on sales essay
I also concerned with my mentor about the topic and after confirming it I selected the suitable company for research work. Banks, for example, get as many deposits as they can and then loan them out at a higher return.
Cash return on equity
Though information and data about the company on its website is considered to be accurate and reliable but somewhere it suffers limitations issue as it was not sure whether the information data provided on websites were updated. I also aimed to consider its progress and growth over the years in its financial strength. This is reflected in high profitability of cement companies in recent years, particularly in FY05 and FY On this basis, it can be said that Tesco is expected to generate higher earnings. However to the possible extent I cross checked all the information from other methods of secondary sources as well for its reliability and accuracy, though these other methods have its own limitations. Further, its ratio is near about same in all the years, while for Sainsbury, it varies significantly. Analysis Since the return on sales equation measures the percentage of sales that are converted to income, it shows how well the company is producing its core products or services and how well the management teams is running it. A grocery chain, for example, has lower margins and therefore a lower ROS compared to a technology company. There were two ethical concerns in gathering and using the information and data of the company, its competitors and other general information about the industry. From the diagram, there is an indication that Tesco has higher returns on equity within the three-year period. This undoubtedly reflects the greater amount of debt in the capital structure vis a vis WM, and a stronger gross margin. In the event the ratio falls below one most assets by the company are financed though equity and if it is more than one it is an implication that the assets of the company are financed through debt financing. Jim would calculate his ROS ratio like this: As we can see, Jim converts 20 percent of his sales into profits.
This is because of its aggressive marketing campaign and promotional strategies. Formula The return on sales formula is calculated by dividing the operating profit by the net sales for the period. Net Income is taken from the income statement, and total assets are taken from the balance sheet.
Going forward, though the growth in domestic demand is likely to be maintained, it is unlikely to compensate for the emerging capacity overhang. I also gave meetings a good consideration because my performance was timely and effectively reviewed.
From the diagram above it is evident that none of the companies was able to achieve a current ratio of 1 for the last three years.
The ROS equation does not account for non-operating activities and expenses, such as taxes and interest expenses.
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