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Profitability Ratio

Profitability ratios are a class of financial metrics that are used to assess a business's
ability to generate earnings compared to its expenses and other relevant costs incurred
during a specific period of time. For most of these ratios, having a higher value relative to a
competitor's ratio or relative to the same ratio from a previous period indicates that the
company is doing well.

1. Net Profit Margin:

Net profit margin is the percentage of revenue left after all expenses have been
deducted from sales. The measurement reveals the amount of profit that a
business can extract from its total sales.

(Net profits ÷ Net sales) x 100 = Net profit margin

2015 2016 2017

Net Profit Margin 7.32 6.43 7.55

Net Profit Margin

2015 2016 20167

The net profit margin is intended to be a measure of the overall success of a business. A
high net profit margin indicates that a business is pricing its products correctly and is
exercising good cost control. Net profit of BBC from 2015-2016 experienced a downfall.
In 2016, net profit margin is 12,1% decreased compared with 2015.The reason for this
decline is in 2016, the cost of goodsold increased. In 2017, the net profit margin was
highest among those in 3 latest years due to an movement of net profit (81,281-
97,329). It implied that BBC pricing its product correctly and higher after-tax profit over
its total revenue
2. ROA (Return on Assets)
Return on assets (ROA) is an indicator of how profitable a company is relative to its total
assets. ROA gives a manager, investor, or analyst an idea as to how efficient a company's
management is at using its assets to generate earnings. Return on assets is displayed as
a percentage and its calculated as:

ROA = Net Income / Total Assets

2015 2016 2017

ROA 9,03 7,94 9,01

Return on Assets

2015 2016 2017

The profit percentage of assets varies by industry, but in general, the higher the ROA the
better. For this reason it is often more effective to compare a company's ROA to that of
other companies in the same industry or against its own ROA figures from previous periods.
Falling ROA is almost always a problem, but investors and analysts should bear in mind that
the ROA does not account for outstanding liabilities and may indicate a higher profit level
than actually derived. In 2015-2016, ROA of BBC suffered a fall by 1,09% . That presented
the lower earnings its asset generated . However, in 2017, ROA increased up to 9,01 which
means BBC more effectively used it asset in working process

3. ROE Return on Equity)

A measure of how well a company uses shareholders' funds to generate a profit. Return on
equity (ROE), is a financial ratio that measures the return generated on
stockholders’/shareholders’ equity, the book or accounting value of
stockholders’/shareholders’ equity which reflects the accumulation over time of amounts
received by the company from stock/share issues plus the profits/earnings retained by the

Return on Equity = Net Income/Shareholder's Equity

2015 2016 2017

ROE 12.74 11.15 12.38

Return on Equity



2015 2016 2017

ROE is more than a measure of profit; it's a measure of efficiency. A rising ROE suggests
that a company is increasing its ability to generated profit. It also indicates how well a
company's management is deploying the shareholders' capital. In other words, the higher
the ROE the better. From 2015-2016, due to lower net income, ROE and ROA of BBC
dropped that caused dissatisfaction for shareholders. In 2017ROA moved upward to 12,38%
that illustrated higher return on money that was gained from shareholders’ investment.