Panera Bread Ratio Essay

Profitability ratios are a category of financial tools that are utilized to evaluate a company’s capability to produce revenue as associated to its expenditures and costs suffered during a specific timeframe. Profitability ratios present numerous gauges of the achievements of a company’s ability to produce revenue. For most of these ratios, having a greater figure in relation to a competitor or previous timeframe is suggestive that the business is flourishing. Common profitability ratios are profit margin, return on assets, and return on equity.
Profit margin is a ratio of prosperity computed as net income divided by revenues. Profit margin is shown as a percentage. Exploration of just the income of a business frequently does not reveal all the facts. Improved income is great, but a growth does not necessitate that the profit margin of a business is improving. For example, if a business has expenditures that have gotten bigger more than the rate of sales it will result in a lesser profit margin and may signify that expenditures need to be managed better. Profit margin will gauge out of each dollar of sales how much a business

The return on assets ratio for 2014 were similar to those Panera Bread had for the 2011 fiscal year signifying a decline. When compared to its competitors, Panera Bread had a lower return on assets ratio that both Starbucks Corp. and Chipotle Mexican Grill who were at 18.57% and 19.55% respectfully. Over the last 5 years, Panera Bread’s asset revenue has been an average of a 13.7% profit. The industry profit on assets has produced a lesser ratio of 12.02%. Panera Bread has been increasing its return on assets over the last five years except for 2014, where Panera Bread had a fall in net income. This signifies that compared to the industry Panera Bread is superior at translating its assets into