Explain the operating profit margin - performance ratios, Financial Management

Assignment Help:

Operating profit margin

Operating profit margin    =   (PBIT / Turnover) x 100%

This is the ratio of operating profit to turnover or sales. A high operating profit margin is due higher sales prices or low costs. Other factors to consider comprise inventory valuation, bulk discounts, overhead allocation and sales mix.

Low profit margins aren't generally good news since it suggests poor performance. But there may be other factors to consider relating to business activities and industry. For illustration the company may be entering a new market which requires low selling prices.

 


Related Discussions:- Explain the operating profit margin - performance ratios

Factors affecting working capital needs of firms, FACTORS AFFECTING WORKING...

FACTORS AFFECTING WORKING CAPITAL NEEDS OF FIRMS A large no. of reasons influences the working capital requirements of firms.  a number of them are as follows: 1. Nature of

Rating scale, Rating denote an issuer's ability to respond to adverse...

Rating denote an issuer's ability to respond to adverse changes in circumstances and economic conditions. The rating scale is generally differentiated into variou

Explain learning outcomes of financial management, Explain learning outcome...

Explain learning outcomes of financial management By the end of this subject guide as well as having done the relevant readings and activities you should be able to

Explain the time value of money, What is the time value of money? The m...

What is the time value of money? The meaning of time value of money is that money you hold in your hand today is worth much more than money you suppose to receive in the future

What are the techniques of financial management, What are the techniques of...

What are the techniques of financial management There are two widely-discussed techniques: (i) Profit maximisation approach and (ii) Wealth maximisation approach.

Explain transaction exposure, How would you explain transaction exposure? H...

How would you explain transaction exposure? How is it different from economic exposure? Answer:Transaction exposure is the sensitivity of comprehend domestic currency values of

Can you explain about overdrafts, Q. Can you explain about Overdrafts? ...

Q. Can you explain about Overdrafts? Overdraft means an agreement with a bank by which a current account-holder is allowed to withdraw more than the balance to his credit up to

Capital budgeting model, Develop a scenario for the future growth of the fi...

Develop a scenario for the future growth of the firm e.g. through using a SWOT analysis to identify an appropriate outcome (this will be covered in lectures) • If it is to grow

Define the safety and soundness implications of mergers, Define the safety ...

Define the safety and soundness implications of mergers? A: No. All mergers need regulatory approval and are subject to intense examination through regulators. If anything, the r

Receivables management, Receivables Management The decision on whether...

Receivables Management The decision on whether to grant or not to grant credit to a particular customer can be taken if certain subjective probabilities of the payment pattern

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd