We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Case Study on Profitability - Assignment Example

Comments (0) Cite this document
Summary to assignment on topic "Case Study on Profitability"
According to figures reported in exhibit 1 operating profit of Deutsche Brauerei has been increasing constantly for the last four years from 4,541,000 in 1997 to 6,106 in 2000. At the same time, operating profit margin has been decreasing from 7.3% in 1997 to 6.6% in 2000…
Download full paper
Polish This Essay
Case Study on Profitability
Read TextPreview

Extract of assignment "Case Study on Profitability"

Download file "Case Study on Profitability" to see previous pages... Thus the decrease in operating profit margin indicates that operating expenses of Deutsche Brauerei rise faster than its sales, which can be clearly seen from exhibit 1: 48.4% increase in sales against 49.5% increase in operating expenses. In turn this means Deutsche Brauerei now has less flexibility in determining prices,
Let us write or edit the essay on your topic "Case Study on Profitability" with a personal 20% discount.. Try it now
and therefore less safety in tough economic times.
The ratio of income taxes to earnings before taxes has also increased to 39.5% in 1999 and 39% in 2000 from 33.8% in 1997 and 34.5% in 1998. From exhibit 1 we can see that taxable income increase steadily over years (which can be explained by unstable economic situation in Ukraine), while earnings before taxes grow slower. Consequently return on sales, which shows the operational efficiency of the company dividing earnings before tax by total sales, has decreased from 4% in 1998 (before default) to 2.8% in 1999 leveling the breakdown to 3.2% in 2000. Still shareholders' equity continues to increase shifting the return on equity ratio up to 10.3% in 2000 - the highest measure for four years; the business looks good from this perspective. Return on net assets which is equal to net income divided by fixed assets and net working capital also shows signs of healthy performance increasing to 8.4% in 2000 6.9% in previous year. The return on assets ratio have returned to its value in 1998 - 4.7% - indicating that a company puts its assets to good use when restoring profitability after economic breakdown in former USSR region.
As can be seen from the exhibit 1, sales in Germany have been increasing slowly over the last four years, while the main stake was made on the Ukrainian market. Therefore changes in profitability of DB are greatly affected by local economic climate, which was very unstable these years. Although experiencing difficulties in generating profit, DB has made a successful recover from economic difficulties of the year 1998.


Leverage ratios determine the company's long-term solvency. "Financial leverage is the name given to the impact on returns of a change in the extent to which the firm's assets are financed with borrowed money." (Scott, 1998) For instance debt/equity ratio shows how much money the company can safely borrow over long-terms and it is measured with dividing the total debt with total equity. The debt/equity ratio for DB has fallen from 72.3% in 1997 to 66% in 2000. The company has borrowed funds in 1997 making investments into Ukrainian market, which is the reason of such high debt/equity ratio in 1997. It is decreasing along with debt/total capital ratio (long-term debt/ long term-debt + shareholder's equity), which was 39.8% in 2000 comparing to 41.9% in 1997. This is a good sign of increasing long-term solvency. EBIT/interest ratio, which shows how many times the company can cover its obligations was rather stable during the last three years (4.7 in 1999, 2000, 4.8 in 1998) increasing significantly from 3.8 in 1997.
The company has significantly decreased its debt in 1998, which was reflected in the increased solvency in the last three years.

Asset Utilization

The efficiency of the business is measured by asset usage ratios. Asset utilization ratios are especially important for internal monitoring concerning performance over multiple periods, serving as warning signals or benchmarks from which meaningful conclusions may be reached on operational issues (Blok and Hirt, 2005). Asset turnover is one of the most important ...Download file "Case Study on Profitability" to see next pagesRead More
Cite this document "Case Study on Profitability"
  • APA
  • MLA
(“Case Study on Profitability Assignment Example | Topics and Well Written Essays - 1500 words”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1513389-case-study-on-profitability
(Case Study on Profitability Assignment Example | Topics and Well Written Essays - 1500 Words)
“Case Study on Profitability Assignment Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.org/miscellaneous/1513389-case-study-on-profitability.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
An organisational case study
Karami (2003) reckons that Strategic Entrepreneurship is viewed as a significant component of any firm’s achievement. “Strategic management is the art and science of formulating, implementing and devaluating cross-functional decisions” (Karami, 2003).
5 Pages(1250 words)Assignment
Exam Case Study
Whilst market is demanding and budgeting proper, the company is reporting losses and future prospects seeming blurred. As such, internal analysis of operations and processes is imperative. The paper addresses the problems faced by the company and sources of the problems.
6 Pages(1500 words)Assignment
Case study Gary hart
57,200 per year Waiting staff ?13,728 Social security costs ?20,800 Utilities ?2,600 per quarter and payable by direct debit the first week of the following quarter. Rent ?40,000 paid in four installments, beginning of every quarter Council tax ?8,000 paid in four installments of 2,000 each payable beginning of each quarter Advertising cost ?
9 Pages(2250 words)Assignment
Final Case Study Analysis
It has been viewed that the company tends to accomplish its predetermined business targets by delivering broad assortment of product choices to its worldwide customers (RadioShack Corporation, 2013). The company has been viewed to terminate its employees due to the reason of its turmoil business position and other important aspects.
5 Pages(1250 words)Assignment
Case Study Analysis
Case Study Analysis Introduction Secondary ticket industry is growing at a significant rate. The secondary ticket market includes each and every ticket transactions where the sellers of the tickets resell several previously purchased tickets this selling process is generally not officially accepted or affiliated by the team or league.
2 Pages(500 words)Assignment
Draper IT(case study)
Company has adopted new business way i.e. E-commerce to improve its business but facing some problem with employees loyalties and resulting in higher turnovers. Draper has a larger product development team that allotted to improve products and manage it and to handle customers' problems and queries also.
10 Pages(2500 words)Assignment
The Developmental Role of Islamic Financial Systems and it's stability, profitability and sustainability, case study: Northern Sudan Islamic Financial Systems
In fact it can only be communicated on a global basis through high levels of diplomacy and flexibility, eliminating all misperceptions of its benefits to the whole of man-kind. This diplomacy would create a global
6 Pages(1500 words)Research Proposal
FridgeCom Case Study
These are: passion, compassion, courage and an attitude to make a difference (Hitt, et al., 2006, p.278). Before talking much about different leadership styles and its contribution in an
16 Pages(4000 words)Assignment
Sombrero Case study
The key issue to address by the business is the length of time it would take one fruit drink, given the numbers each employee should be able to make a one fruit
2 Pages(500 words)Assignment
Fourwinds Marina case study

The author describes that Keltner came upon his present position because of his reputation as a hard worker. He is a former accountant who is trying to prove his worth in an industry whose operations he is not well acquainted with. The problems that the marina is experiencing are due to the inexperience of the general managers.

4 Pages(1000 words)Assignment
Let us find you another Assignment on topic Case Study on Profitability for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us