It will include how the company sell their products by minimizing the cost and maximizing the profits. Besides that, the ratios also show the company’s ability to measure the overall efficiency by generating returns for its shareholders. Thus, a higher value of profitability ratios means that the company is doing well and it is good at earning profits, revenues and cash flows. Profitability ratios are of little value in isolation. By comparing and analyzing the capability of competitors, the company can look at their own profitability compared to their competitors’ profitability because it will give them very useful and meaningful information.
Due to Wal-Mart’s superior ability to order inventory on demand, they are in a position to also meet customer demand better than their competitors. This is especially true with fad products, because they are only popular for a limited amount of time when they become unpopular they can leave massive amounts of inventory that nobody wants to purchase. Due to Wal-Mart’s superior supply chain and their technology they are better able to avoid carrying an oversupply of fad items, and regular items as well.
Therefore, when the management discusses improving employee retention rates, the initial topic is often higher salaries and bonuses. That is partly valid, because money is a key element; as SAS can attest, retention efforts can be very effective if they focus on more ways to spend the money than just increasing salary levels. With its strategy to boost employee retention, the company has created a culture and programs that encourage and drive employee loyalty. According to Pfeffer (2001), "Your profits come from loyal customers who do business with you for reasons other than just price. Customer loyalty is a consequence of loyalty from employees who produce great products and offer great service.
There is no doubt that profitability can be an indicator of market power, but it is important to not base the decision of market power only on this aspect. As explained, the profit can also be a sign of efficiency and high profits can be achieved in competitive markets through legit actions. Profits are an incentive for firms to innovate and expand. If the profit becomes directly associated with market power, the companies may stop to invest in innovation that could lead to lower production costs. Nevertheless, small companies may not be interested anymore to expand and will try to keep their profits at a certain level that would not make them dominant.
Rondo's performance is good in this area. Asset Management Rondo's Inventory Ratio declined to 9.5 in 2005, down from a ratio of 10 in 2003 and 2004. Rondo's sales improved year-over-year and the decline in inventory turns may be the result of carrying more inventory in response to increased sales. However, Rondo is still carrying too much inventory or the company may have excess obsolete inventory. Rondo needs to utilize just-in-time methods to improve inventory turn over.
The earnings per share for both the companies is following a zigzag trend due the change in net income for the respective years. In the years 2010 and 2011 the earning per share of IOCL has decreased in comparison to HPCL due to increase in number of shares from 119.47 to 242.7. The share capital of IOCL is quite large in comparison HPCL i.e. IOCL’s equity share capital is 2427.95(crore)and that of HPCL is of 339.1(crore) but the profit earned by the company is not much in contrast to each other so EPS of IOCL is in same range as of HPCL.
Skimming is most effective if demand is inelastic. For e.g. Cadbury put their prices at the same as most of their competitors and at the price their customers are able to pay. 2. Cost plus pricing Pricing methods which are based on the cost structure of Cadbury that are favoured by accountants because they are supposedly more accurate and reliable.
Price premium definition is sum consumers are willing to pay for a brand, compared to other related brands, and can be either negative or positive. The price premium does not essentially fully relate with actual consumer prices. It is also used to increase revenues in where consumers are happy to pay higher when there are no closed substitutes for the product. The term also symbolizes a high-status business that could produce far more revenue in the short term by reducing prices. Sales volumes remain low by keeping prices high.
Core Logic is lacking in its Net Income, which is why their percentage is so much lower than the other companies in the industry. If we were to increase their net income (change the numerator) their Return on equity would be higher and would make investors happier with a faster and higher return rate. Profit Margin’s for the data and information’s industry aren’t very high on average however Core Logic is 3% lower which suggests in theory that they’re missing three cents of profit for every dollar of revenue which in the long term hurts the company . I would recommend figuring out a way of increasing the company’s Net Income (Numerator of fraction) to increase the company’s profit margin; but by doing that it will affect both the return on assets and return on equity positively. By increasing the net income it will directly increase the ratio figures for each group, which is a positive effect since it helps those values close in on the industry average.
Walmart is the largest retail store in the world. Walmart has been leading in the industry due to their outstanding distribution strategy which allows them to carry out the promises they make to their customers. Walmart uses the slogan “Save Money. Live Better” which is something they can guarantee. Walmart has a reputation of having the lowest prices in retail sales.