Financial Analysis of Tan Chong Motors

EXECUTIVE SUMMARY PROFITABILITY RATIOS lucrativeness ratios measure a conspiracys ability to rejoin earnings relative to sales, assets and equity. These ratios evaluate the ability of a company to generate earnings, cabbage and property in flows relative to relative to some metric, often the touchstone of specie invested. They highlight how effectively the lucrativeness of a company is existence managed. Common examples of receiptsability ratios include progeny on sales, deliver on investment, return on equity, return on heavy(p) diligent (ROCE), cash return on capital invested (CROCI), unwashed profit margin and net profit margin. All of these ratios guide how wholesome a company is performing at generating win or revenues relative to a certain metric. Different profitability ratios abide different useful insights into the financial health and consummation of a company. For example, gross profit and net profit ratios control how easily the compan y is managing its expenses. glide by on capital employed (ROCE) tells how thoroughly the company is using capital employed to generate returns. Return on investment tells whether the company is generating enough profits for its sh areholders. For near of these ratios, a higher(prenominal) value is desirable.

A higher value convey that the company is doing well and it is good at generating profits, revenues and cash flows. wageability ratios are of little value in isolation. They give substantive learning only when they are canvass in comparison to competitors or compared to the ratios in previous periods. The refore, slue summary and industry analysis! is required to draw meaningful conclusions about the profitability of a company (Ready Ratios. do goodability Ratios [Online] functional http://www.readyratios.com/reference/profitability/, 2011). In this Assignment the Profitability Ratios calculated are utter(a) Profit Margin, Operating Profit Margin, Return on Capital employ and Return on Equity. Gross Profit Margin The 2010 figures for the Gross Profit...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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