Accounting Analysis Report
Because the companies can increase their sales every year, they finally are being able to manage their COGS more effectively, and rarely return on sales appeared. Therefore they could increase their gross profit margin in 2008-2009. Both of the company has good gross profit margin, but Super Cheap Auto Group has a better gross profit margin than ARB Corporation.
Net profit margin means the relationship between the final profit and sales’ Cackling et al 2010, p 664). According to table 1, both of company has good net profit margin from 2008-2009 although there’s no significant increase. This is caused by the gross profit of both companies are bigger than the expenses during 2008-2009.
According to table 1, ARB Corporation has bigger net profit margin than Super Cheap Auto Group. Return on equity means the profit or loss earned in utilizing the investment of the owners’ Cackling et al 2010, p 668).
Return on equity depends on the company ability to make profit (return) for the equity. According to table 1, the return on equity of both companies has increased during 2008-2009. It implies that both of company has good ability to make profit (return) for the equity. Return on assets means ‘how much profit has been generated by using the given level of total assets’ Cackling et al 2010, p 668). Return on assets refers to the company ability to make profit (return) for each asset.
According to table 1, the return on assets ot botn companies nas increased during . It means that botn o companies have good ability to make profit (return) for each asset. Asset turnover means ‘show how effective an organization is in generating income from its total investment in assets by relating sales/service revenue to the value of otal assets’ Cackling et al 2010, p 657). According to annual report 2009 of Super Cheap Auto Group, the total assets of Super Cheap Auto Group in 56,000 and ,OOO. This means that the total assets of Super Cheap Auto Group increase in 2008-2009.
These factors are affecting the increase number of assets turnover of both companies.