Essays on Trend of Sales, Gross and Net Profit Margin Return on Assets and Equity, Cash Flow Statement Assignment

The paper “ Trend of Sales, Gross and Net Profit Margin Return on Assets and Equity, Cash Flow Statement” is an engrossing example of an assignment on finance & accountingю The trend for the sales of Pacific Brands shows that the sales have grown in 2007 over 2006 and this trend continues till 2008. After that, the sales have fallen which is resulted by a dip in the percentage change which shows that the revenue has fallen continuously for both 2009 and 2010.    2010 2009 2008 2007 Revenue 1742393 1959786 2116640 1820737 Percentage Change -11 -7.41 16.25 12.05 This is also evident in the graph below The above graph shows that after 2008 the revenues have seen a dip as seen from the graph and the dip has been substantial raising fear and alarms regarding the future revenues of the company. 2.

Gross & Net Profit Margin Ratios Formulas 2010 2009 2008 2007 Gross Profit Margin Gross Profit / Sales * 100 722,821 / 1,742,393 * 100 = 41.48 815,565 / 1,959,786 * 100 = 41.61 940,426 / 2,116,640 * 100 = 44.43 758,634 / 1,820,737 * 100 = 41.67 Net Profit Margin Net Profit / Sales * 100 53,195 / 1,742,393 * 100 = 3.05 (234,291) / 1,959,786 * 100 = (11.95) 117,126 / 2,116,640 * 100 = 5.53 106,136 / 1,820,737 * 100 = 5.82 The above chart shows that the gross profit margin has grown in 2008 over 2007 but then a dip in gross profit is seen.

The dip is not substantial thereby not raising many fears. A look at the net profit margin shows that the net profit margin has grown till 2009 and after that, a dip is seen which is substantial. Another important finding from this ratio is that the organization has incurred a lot of indirect expenses which has resulted in the net profit to be very low when compared to the gross profit margin. 3.

Return on Assets & Equity Ratios Formulas 2010 2009 2008 2007 Return on Assets Net Income / Total Assets * 100 112,940 / 2,088,610 * 100 = 5.40 (272,281) / 2,225,495 * 100 = (12.23) 117,126 / 2,486,392 * 100 = 4.71 106,136 / 2,555,518 * 100 = 4.15 Return on Equity Net Income / Equity * 100 112,940 / 1,379,457 * 100 = 8.18 (272,281) / 1,266,690 * 100 = (21.49) 117,126 / 1,330,088 * 100 = 8.80 106,136 / 1,319,374 * 100 = 8.04

References

Howorth, C., & Westhead, P. 2003. The focus of working capital management in UK small firms. Management Accounting Research 14, 94-111

Herald. 2011. \$166 million loss for Pacific Brands after weaker sales. Retrieved on August 24, 2011, from http://article.wn.com/view/2011/08/24/166m_loss_for_Pacific_Brands_after_weaker_sales/

PBG. 2011. Chairman & CEO Address to Shareholders. Retrieved on August 24, 2011, from https://www.nzx.com/companies/PBG/announcements/201408

Ryan, H. 1996. The Use of Financial Ratios as Measures of Risk in the Determination of the Bid-Ask Spread. Journal of Financial & Strategic Decisions, 9 (2), 33-41

Solawu, R. O. 2006. Industry Practice and Aggressive Conservative Working Capital Policies in Nigeria. European Journal of Scientific Research, 13(3)