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Financial Performance of EMAP PLC - Essay Example
Pages 4 (1004 words)
Table 1 shows the major accounts of EMAP PLC for the end of March 2004 and 2005. During 2005, the company was able to generate revenue from all its product lines of 1,068 million, a minimal increase from the 1,050 million recorded in the previous year. The company's asset account shows resources amounting to 835 million, 317 million of which are classified as current assets…
Specifically, it enables a financial analyst to spot trends in a business and to compare it with the performance of similar business enterprises within the same industry. Financial ratios are grouped into three categories, each showing a different aspect of a company's financial operations. These are profitability ratios, financial leverage ratios and liquidity/solvency ratios.
Profitability ratios measure the ability of the company to generate income from its investments less the costs incurred. The gross profit margin ratio tells us the profit a business makes on its cost of sales, or cost of goods sold. It tells us how much gross profit per peso of turnover our business is earning. Gross profit is the profit we earn before we take off any administration costs, selling costs and so on. The computed operating profit margin, which is the ratio of operating income to sales measures as a percentage of sales, the excess revenue from sales over cost of normal operation excluding financing. Net profit margin, on the other hand, is the ratio of net income to sales. Unlike the operating profit margin, it takes into account the secondary or incidental gains aside from the company's main business operation and all the costs incurred including financing. ...