Question

How do can i make a cause of change analysis, profitability, competitive advantage, and returon on equity on navient corporation? Please help! (I just need help explaining how to do each 4 requirements above for my project).

Answer 1

First of all open the annual report of the company

Profitability: It is very simple to do analysis of profit of the company, one just has to take profit figure and sales figure from the annual report and find the net profit ratio

Net profit ratio = Net profit/sales

Then compare this ratio with it's peer to see whether company has good profit margin or not. If one finds that profit margin is less comparedto its peer than look at its historical balance sheet and comute same ratio for prior period and observe the change ie whether it is decreasing or increasing

competitive advantage: Look at the management discussion part of annual report, See whether company has any special technology, process etc.

Return on equity : It is ratio that shows how much an owner of business gets. it is calculated as follows

=Profit after tax/ Equity

change analysis : it indicate whether previous problem has been resolved or not. Forthis one has to compare 5 to 6 years of annual report , find any problem and check wheher it has been resolved or not