Harley Davidson Performance Analysis There are many ways to analyze the performance of a company, some more popular than others. According to the Barney text the accounting method is the most popular way of measuring a firm's performance (Barney, 2002). Some of the reasons for the popularity could include the fact that accounting measures of performance are publicly available on many firms and they communicate a great deal of information about a firm's operations. Other methods of performance analysis include firm survival and the multiple stakeholder approach. The first method we will review is the accounting method. Through this accounting approach we will analyze specific ratios and their possible impact on the company's performance. The specific ratios we will review include the return on total assets, return on equity, gross profit margin, earnings per share, price earnings ratio, debt to assets, debt to equity, accounts receivable turnover, total asset turnover, fixed asset turnover, and average collection period. I will explain each ratio in greater detail, and why I have included it in this analysis, when I give the results of each specific ratio calculation. The return on total assets (ROA) is an overall measure of profitability which measures the total effectiveness of management in generating profits with its available assets. This ratio indicates the amount of net income generated by each dollar invested in assets. The higher the firm's return on total assets, the better. Harley Davidson's return on total assets was 14.04% for 2001, 14.27% for 2000. These percentages are high and show an upward trend, this shows strong performance in this area for the past two years. Return on equity (ROE) measures profitability from the stockholders perspective. The ROE is a calculation of the return earned on the common stockholders' investment in the firm. Generally, the higher this return, the better off the stockholders are. Harley Davidson's return on equity was 24.92% for 2001, 24.74% for 2000. They have sustained consistent, positive, returns for their shareholders for the past two years. The next ratio we will review is gross profit margin. Gross profit margin (GPM) measures the percentage of each sales dollar remaining after the firm has paid for its goods. The higher the gross profit margin, the better. Harley Davidson's gross profit margin was 35.08% for 2001, 34.09% for 2000. The fourth ratio we will analyze is earnings per share. Earnings per share (EPS) are the number of dollars earned during the period on behalf of each outstanding share of common stock.
This requirement makes it important to look through a majority of the return ratios, which include return on sales, return on assets, and return on equity. Additionally, investors are also interested in the ratios related to the company’s earnings, such as earnings per share (EPS) and PE ratio. Looking at return on sales, we can see that Wendy’s has a 7.27% return on sales and Bob Evans has a 1.23%, which demonstrates Wendy’s has a higher profit margin. Moreover, Wendys’ return on assets is 2.85% and Bob Evans is 1.58%. Also, Wendy’s and Bob Evan 's have return on equity ratios of 6.66% and 4.30%, respectively. All of these return ratios show that Wendy’s has a better handle on turning working capital into revenue. On the other hand, although Wendy’s return ratios are higher than Bob Evans, Bob Evans has a better performance on earnings per share and PE ratio. This is due to Bob Evans having less common stock share outstanding, which makes their earnings per share and PE ratio higher than Wendy’s. Due to the EPS being higher for Bob Evans, we would recommend that investors look towards Bob
Harley Davidson has built a brand that is more than just the spread eagle on a load rumbling motorcycle, but for those who purchase a Harley they are purchasing a lifestyle, an experience, or piece of American culture if you will. Due to this differentiating factor Harley has been able to charge a premium for its products and still be successful against its lower priced competition. Harley built upon this lifestyle when it created the Harley Owners’ Group (HOG). Harley would promote shows, rallies and rides through HOG in the US and even in other countries. This helped to build its coveted image into more of an exclusive club.
The gross profit margin ratio is used to show how much of each sales dollar is left after certain costs are covered (footnote). Looking at the table, Supervalu has increased its gross profit margin from 14.4% in 2015 to 14.7% in 2016 (in millions of dollars). This shows that net income for 2015 was 14.4 percent of sales and in 2016 increased to 14.7 percent of sales. Likewise, Walmart has increased its gross profit margin from 24.8% in 2014 to 25.1% in 2016 (in millions of dollars).
Description: Return on Equity (ROE) indicates what each owner’s dollar is producing in terms of net income that is the rate of return on stockholder dollars. ROE is a common metric for assessing the value of a firm and most investors look to ROE first when deciding where to allocate their capital. As such, it is also an important measure for a CEO to monitor.
Return on capital employed (ROCE) expresses a company’s profit and displayed as a percentage of the amount of capital invested in the company. ROCE interprets “capital employed” as the total amount of money invested in the company in the long term, regardless of whether that money has been supplied by shareholders or lenders. This amount will compared with the return achieved on that capital. The results were shown that Wm Morrison Supermarkets are higher than Tesco by 4.55 per cent.
Ratios for return on assets and return on equity offer support for the loss in stockholders’ equity. Return on assets went from 13.1 in 2000 to 5.1 in 2001 and return on equity dropped from 25.4 in 2000 to 8.7 in 2001. Return on equity represents return on assets divided by the difference of 1 and debts/assets.
Harley Davidson, Strategic Analysis . 2013. Harley Davidson, Strategic Analysis . [ONLINE] Available at:http://www.slideshare.net/MahmoudMHamid/harley-davidson-strategic-analysis. [Accessed 16 December 2013].
The Harley Davidson brand has significantly contributed to the success of the company by building strong market recognition and a loyal customer base. The company reported strong operational efficiency with decreased cost and increased margins in 2012. Harley Davidson’s revenue stood at $5,580.51m, showing an increase of 5.1% over $5,311.71m in 2011. Its operating income increased to $1000.18m in 2012, indicating 20.5% growth over $829.97m in 2011. The company reported increased operating margin of 17.92% in 2012, as compared to 15.62% in 2011. The operating margin has increased 229 basis points (bps) over 2011 which may indicate management's high focus on improving profitability. The increased operating margin may indicate efficient cost management or a strong pricing strategy by the company. On the other hand, the company reduced its operating cost as percentage of sales to 82...
Competition Bikes witnessed an increase in gross profit margin in year 7 at 27.4 having risen from 26.6% in the year 6. This is an indicator of the increase in Gross Profit in relation to sales. Year 8 however witnessed a marginal decline in Gross Profit margin which was reported at 27.0%. The 0.4% decline in Gross Profit margin between year 8 and 7 signifies that there was a proportional increase the amount of sales revenue that was taken up by the cost of sales. As a result, it is in order to state that there was a proportional decline of the gross profit by 0.4% of the total sales revenue and an increase in cost of sales by 0.4%.
Return on equity is a measure of profitability that figures what number of dollars of benefit an organization creates with every dollar of shareholders' equity. The formula for ROE is net income divided by average stockholders’ equity. The ROE for Johnson & Johnson is 10,853,000 /60,702,500 = 17.9%. ROE is more than a measure of benefit; its a measure of productivity. A climbing ROE infers that an organization is expanding its capabili...
Strong brand image, operational efficiency and wide range of products and services on offer are the company principal strengths. The company boasts of one of the strongest brands in the world that has helped the company in attracting and retaining a loyal customer base. The company managed to establish a powerful brand image with its motorcycles attaining iconic status and being ranked among the most valuable brands in the world. Harley Davidson is permanent feature among the top 100 brands in the world. The high level of innovation and heavy investment in research and development has enabled the company to build resilient motorcycles known for durability, quality, design simplicity and traditional styling. The creativity of the company has enabled it achieve industry recognition for high quality, robust performance, best design and unwavering customer confidence a...
This indicates that for every RM 1 investors have invested in company, they only able to earned RM 0.18. However, its return on equity was improved substantially thanks to increase in net profit in year 2014. The company’s return on equity reached the highest among five years at 0.2809 in year 2014. A return on equity is favorable because it indicates that company is able to generate more returns to the shareholders. In year 2015, return on equity of company showed a decrease trend dues to the decrease of net income. In year 2016, company’s return on equity was increased again to 0.2476. In order to further improve return on equity, company should focus on improving their return on sales. In other words, company need to increase return on sales at a rate faster than the rise of their operating costs. In addition, company may increase their debt capital in order to increase its return on equity. This can be increase the return on equity as long as after tax cost of debt is lower than its return on
The lack of competition for Harley-Davidson gave them a profitable advantage and they became quite successful with the sales of their motorcycles. However, by1969, Harley-Davidson experienced some financial hardships through losing ventures and was purchased by American Machine and Foundry Company(AMF). As time went on Honda and Kawasaki entered the U.S. market and by 1981 Japanese motorcycles were viewed as a high performance motorcycle that was also dependable. By 1987, Harley-Davidson was a publicly traded company that has removed its product line into four different styles with a unique engine. Their quality improved as well. Through all the hard times, Harley-Davidson faced they always seemed to bounce right back. (Strategic Management ,
Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.
Harley-Davidson’s management had much to be proud of as the company wrapped up its Open Road Tour centennial celebration that began in July 2002 in Atlanta, Georgia, and ended on the 2003 Memorial Day Weekend in Harley’s hometown of Milwaukee, Wisconsin. The 14-month Open Road Tour drew large crowds of Harley owners in each of its five stops in North America and additional stops in Australia, Japan, Spain, and Germany. Also during its 2003 centennial year, Harley-Davidson was named to Fortune’s list of “100 Best Companies to Work For” and was judged third in automotive quality behind Rolls-Royce and Mercedes-Benz by Harris Interactive, a worldwide market research and consulting firm best known for the Harris Poll. The company’s revenues had grown at a compounded annual rate of 16.6% since 1994 to reach $4.6 billion in 2003—marking its 18th consecutive year of record revenues and earnings. In 2003, the company sold more than 290,000 motorcycles, giving it a commanding share of the 651+cc motorcycle market in the U.S. and the leading share of the market in the Asia/Pacific region. The consistent growth had allowed Harley-Davidson’s share price to appreciate by more than 15,000% since the company’s initial public offering in 1986.