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Industrial Average Ratios Essay

1863 words - 7 pages

Return on capital employed =Net profit percentage =Gross Profit percentage =Asset turnover = timesFixed Asset turnover = timesStock turnover period = daysDebtor's collection Period = daysCreditors payment period = daysCurrent Ratio = timesLiquidity Ratio =Gearing =Interest cover = timesEarning per share = £2,125/per shareDividend Yield =Dividend Cover = timesPrice Earning Ratio =Return on Equity =Return on Capital Employed: Profit calculated before interest and tax, divided by the difference between total assets and current liabilities. The ratio calculated shows the expansion that capital generates revenue (http://www.investorwords.com/5770/Return_on_Capital_Employed.html).The ROCE ratio, expressed as a percentage, implements the return on equity (ROE) ratio, which adds to company's debt liabilities, the company's total capital employed. By this a company can better investigate their ability to generate returns from their capital (http://www.investopedia.com/university/ratios/profitability-indicator/ratio5.asp).Investors can enquire how profitable a company is by comparing net income to the sum of a company's debt and equity capital. The ROCE measurement is an all inclusive method to check over the profitability of a company because it can estimate the ability that a manager has for producing (http://www.investopedia.com/terms/r/roce.asp).The average ratio is 25% and the SYS is 28,57%. 3,57% higher. That means that the company is more efficient than the industrial average. The SYS plc can raise more funds to company and also acquire better management.Net profit percentage. Expressed as a percentage of sales revenue (http://www.encyclopedia.com/doc/1O18-netprofitpercentage.html) . The industrial average is 35% but the SYS is 28,3% lower by 6,7% . That declares lower competitors prises and lower margins of safety.Gross Profit Percentage: Is a ratio which show which is the profit when all the variable costs are subtracted from the revenues. When the gross profit is expressed as a percentage of sales is the ratio of financial presentation (http://www.encyclopedia.com/doc/1O18-grossprofitpercentage.html). By this way a company can measure its trading success.With a 65% of gross profit percentage in industrial average, we can understand that there is a controlled management. On the other hand, the 60% in gross profit in SYS plc it saws that probably there are high expenses or the management is not so good controlled, so it should be decreases the prices.Asset turnover: It measures the company's efficiency to use its asset in order to generate sales. As higher that number is so better for the company (http://www.investopedia.com/terms/a/assetturnover.asp).SYS plc has a little bit higher asset turnover than the industrial average. That shows that there is a higher profit on margin.Fixed asset turnover: measure's how efficient is a company to generate net sales revenue from fixed-asset investments...

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