RATIO ANALYSIS AND statement ratio Analysis and statement when Coke and Pepsi were introduced into the market, the accounting laws and procedures were not offered like they are today. Ways to calculate profit and loss were obtainable but not to the extent that companies use in the technological age that is apparent in the world. This paper will show how two extremely similar companies are compared in a variety of areas of the market.
Operating profitability operating profitability defined as "a measurement of the money a company generated from its own operations" (Investing for Beginners, pg. 1), is a key attribute in any business. A company with a higher operating system will have a lower fixed cost and a higher margin compared to other companies. This is calculated by the operating income divided by the total revenue earned. The monies from the investors are not calculated into the above equation.
So, in essence operating profitability is the amount of money a company has in the bank that is exclusively revenue from sales.
Asset UtilizationFinancial ratios are indicators used to gauge a firm's performance and financial strength. Most of these ratios can be calculated from data entered on a company's financial statements. These financial ratios are a good way to analyze trends and to compare the company's financial abilities to other organizations. One way to project and determine a company's performance is to analyze the way they manage their assets reviewing the asset management ratios. Asset management ratios are a set of ratios that measure how effective an organization manages the assets. One such ratio is the Inventory Turnover Ratio; the formula for this ratio is sales divided by inventories. Another important measuring ratio is the Fixed Asset Turnover Ratio; this reveals how effectively the company operates it plants and...