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  • 04-01 - Financial Analysis (Dragged) 23

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    Salsabila Aufa
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    Net Profit Margin measures net income divided by sales after adjusting for all expenses and taxes, with a ratio expressed as a percentage. For H. J. Boswell, Inc., the net profit margin was 7.6%, earning $0.076 for each dollar of sales after expenses, whereas peer firms earned $0.102. Operating Return on Assets (OROA) measures operating income divided by total assets to evaluate management's control of expenses and efficient use of assets.

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    Net Profit Margin measures net income divided by sales after adjusting for all expenses and taxes, with a ratio expressed as a percentage. For H. J. Boswell, Inc., the net profit margin was 7.6%, earning $0.076 for each dollar of sales after expenses, whereas peer firms earned $0.102. Operating Return on Assets (OROA) measures operating income divided by total assets to evaluate management's control of expenses and efficient use of assets.

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    6 views3 pages

    04-01 - Financial Analysis (Dragged) 23

    Uploaded by

    Salsabila Aufa
    Net Profit Margin measures net income divided by sales after adjusting for all expenses and taxes, with a ratio expressed as a percentage. For H. J. Boswell, Inc., the net profit margin was 7.6%, earning $0.076 for each dollar of sales after expenses, whereas peer firms earned $0.102. Operating Return on Assets (OROA) measures operating income divided by total assets to evaluate management's control of expenses and efficient use of assets.

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    of 3

    Cost Control: Net Profit Margin (1 of 2)

    Net Profit Margin measures how much income is


    generated from each dollar of sales after adjusting
    for all expenses (including income taxes).

    Net Profit Net Income


    =
    Margin Sales
    Cost Control: Net Profit Margin (2 of 2)
    What is the net profit margin ratio for H. J. Boswell,
    Inc.?
    • Net Profit Margin
    = $204.75 million ÷ $2,700 million = 7.6%
    The firm generated $0.076 for each dollar of sales after
    paying all of the firm s expenses, whereas the peer-
    group firms earn $0.102.
    Return on Invested Capital
    Operating Return on Assets ratio is the summary
    measure of operating profitability. It takes into
    account both management s success in controlling
    expenses and its efficient use of assets.

    Operating Return Net Operating Income or EBIT


    =
    on Assets (OROA) Total Assets

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