Question

You are given the following information from a well known corporation. Conduct an analysis of the data. This analysis should include year-over-year changes in terms of percentage and absolute/net for:

• Revenues

• Operating Income

• Net Income

Calculate the following ratios for each year:

Net Profit Margin

Operating Profit Margin

Net Return on Total Assets (ROA)

Return on Stockholders Equity

Here's the data:

	2017	2016	2015	2014	2013
Sales (Sales Revenue)	12917	11699	10109	9006	8032
Operating Income	883	743	548	438	284
Profit After Taxes	551	466	343	246	147
Total Assets	5538	5294	4292	3987	3783
Total Stockholders Equity	3878	3802	2991	2373	1628

Answer 1

Analysis of Year over Year (YoY) performance for the Corporation:-

Trend for Revenue: There is a rise in sales revenue through the years. There is an upward trend at an increasing rate till 2016.But in 2017, though the trend is upward it is at a decreased rate. This is evident from the fact that percentage increase in sales revenue had risen by 15.74% in 2016, but it became 10.41% in 2017.

Trend for Operating Income: In case of operating income, the values are rising through the years. There is a positive trend but the rate at which the rise is happening is fluctuating through the years.

Trend for Net Income: The PAT has risen through the years. But it is rising at a decreased rate. It is evident from the fact that the percentage of rise is decreasing with years.

Analysis for Ratios:

1. Net Profit Margin: The Net Profit Margin is increasing through the years, indicating a good health of the company.

2. Operating Profit Margin:-The Operating Margin is also increasing through the years, indicating company is in path of achieving operational efficiency.

3. ROA: From 2014, onwards the company's ROA is increasing, meaning that it is being able to effectively use its assets to generate revenue. In general terms, an ROA of 5% or more is considered good.

4. ROE:- The ROE is also rising for the company through the years, indicating it is efficiently using its capital structure to generate revenue.

Based on the ratios, the company is showing a positive trend.