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What is Accounting Ratios Analysis Assignment Help?
Accounting Ratios Analysis assignment help or Accounting Ratios Analysis homework Help refers to the service where we help students in the preparation of their assignment using various accounting ratios. One can understand our approach by seeing the operating margin analysis using accounting ratios for Loblaw Company (LLC) and Metro Inc. (MI) companies. This will help student to understand accounting Ratios Analysis assignment help or Accounting Ratios Analysis homework Help service.
Approach using Examples for Accounting Ratios Analysis Homework Help
Operating Margin Analysis for Accounting Ratios Analysis Assignment Help
The operating margin analysis for both the company will be done using operating margin and related ratios. This is a class of ratio used to assess the earnings of a corporation as compared to its expenses. This will help us in analysing the earning potential of LLC & MI. It consists of 3 ratios and let analyse one by one to understand the drivers of earning operating margin for both companies.
|Operating Analysis:- LLC|
|Gross Margin ratio||46.98%||48.58%|
|Profit Margin Ratio||5.90%||5.32%|
|Operating Analysis:- MI|
|Operating Margin Ratio||20.54%||12.62%|
|Gross Margin ratio||39.11%||37.47%|
|Profit Margin Ratio||6.21%||3.81%|
|Cash Flow to Sales Ratio||9.30%||10.53%|
Gross Margin calculation for Accounting Ratios Analysis Homework Help
It basically measures the profit after cutting cost of sales. From Table 2, it is clear that LLC maintains very moderate gross margin of 46% to 48% in last 2 years. However the good thing is that over the period of time it is in increasing trend due to improve in its operation.
From Table, it is clear that MI maintains very less gross margin of 37 to 39% in last 2 years. However it is in decreasing trend presenting bad picture about the company. It is also much lesser than the gross margin charged by LLC.
Profit Margin calculation for Accounting Ratios Analysis Assignment Help
It shows the earning after interest and taxes. It can be getting from EBIT profit after deducting interest and taxes. It is also in the decreasing trend from 5.89% in 2012 to 5.31% in 2013. LLC will have to take action to control the falling profit else just $5.31 is left for every $100 of sales made by the company.
As shown in the table it is in the decreasing trend from 6.21% in 2012 to 3.81% in 2013. MI will have to take action to control the falling profit and its fall is much higher compare to LLC as just $3.81 is left as profit for every $100 of sales made.
Operating Margin calculation for Accounting Ratios Analysis Homework Help
This ratio, which is expressed as a percentage, compares a company’s operating cash flow to its net sales or revenues, which gives investors an idea of the company’s ability to turn sales into cash. It would be worrisome to see a company’s sales grow without a parallel growth in operating cash flow. Positive and negative changes in a company’s terms of sale and/or the collection experience of its accounts receivable will show up in this indicator .From the analysis we found that LLC ratio is in decreasing trend which presents pressure on its cash flow. It decreases from 8.39% to 6.785 showing the decrease in net operating cash flow as percentage of total revenue.
From the analysis we found that MI ratio is in increasing trend due to improvement in the operations of the company. It increases from 9.30% to 10.53% showing the improvement in its operation compare to LLC.
Inference from the Operating Margin Analysis
The entire analysis shows that the operating margin ratio is lesser for LLC despite higher gross margin. It is lower that Canada industrial average of 9%. This is because of the reason that it is having huge S, G & A expense compare to MI. Hence, MI is better compare to LLC as in this industry S, G & A plays important role in driving the margin.
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