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    Franchisee'S Ratio Analysis: Ratio Formula Year Ended 2019 2020 2021 2022 2023 Profitability Ratios

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    Donna Bato
    The document contains ratio analyses for both a franchisee and franchisor over several years. For the franchisee, profit margins and returns on assets and equity were negative from 2019-2020 but became positive from 2022-2023, indicating improving financial performance over time. For the franchisor, all ratios remained positive from 2019-2023, suggesting steady and consistent profitability. The analyses suggest both entities experienced growth, with the franchisee turning profitable in later years and the franchisor maintaining stable returns.

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    Franchisee'S Ratio Analysis: Ratio Formula Year Ended 2019 2020 2021 2022 2023 Profitability Ratios

    Uploaded by

    Donna Bato
    18 views3 pages
    The document contains ratio analyses for both a franchisee and franchisor over several years. For the franchisee, profit margins and returns on assets and equity were negative from 2019-2020 but became positive from 2022-2023, indicating improving financial performance over time. For the franchisor, all ratios remained positive from 2019-2023, suggesting steady and consistent profitability. The analyses suggest both entities experienced growth, with the franchisee turning profitable in later years and the franchisor maintaining stable returns.

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    Ratio

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    The document contains ratio analyses for both a franchisee and franchisor over several years. For the franchisee, profit margins and returns on assets and equity were negative from 2019-2020 but became positive from 2022-2023, indicating improving financial performance over time. For the franchisor, all ratios remained positive from 2019-2023, suggesting steady and consistent profitability. The analyses suggest both entities experienced growth, with the franchisee turning profitable in later years and the franchisor maintaining stable returns.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    18 views3 pages

    Franchisee'S Ratio Analysis: Ratio Formula Year Ended 2019 2020 2021 2022 2023 Profitability Ratios

    Uploaded by

    Donna Bato
    The document contains ratio analyses for both a franchisee and franchisor over several years. For the franchisee, profit margins and returns on assets and equity were negative from 2019-2020 but became positive from 2022-2023, indicating improving financial performance over time. For the franchisor, all ratios remained positive from 2019-2023, suggesting steady and consistent profitability. The analyses suggest both entities experienced growth, with the franchisee turning profitable in later years and the franchisor maintaining stable returns.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    FRANCHISEE’S RATIO ANALYSIS

    RATIO FORMULA YEAR ENDED


    2019 2020 2021 2022 2023
    PROFITABILITY RATIOS
    𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑓𝑡𝑒𝑟 𝑇𝑎𝑥
    Net Profit Margin 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 -1.288 -0.327 -0.076 0.032 0.102

    𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡
    Gross Profit Margin 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 -0.926 -0.102 0.108 0.193 0.223

    𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡
    Operating Profit
    𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 -1.288 -0.327 -0.076 0.032 0.102
    Margin
    𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑓𝑡𝑒𝑟 𝑇𝑎𝑥
    Return on Assets 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 -1.255 -0.617 -0.269 0.131 0.342

    𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑓𝑡𝑒𝑟 𝑇𝑎𝑥


    Return on Equity 𝐸𝑞𝑢𝑖𝑡𝑦 -1.255 -0.617 -0.269 0.131 0.342

    ANALYSIS

    Net Profit Margin: It shows that the company has the ability to pay its taxes from 2022 onwards. It means that the company is
    efficient in converting its sales into actual profit and its cost control is efficient.
    Gross Profit Margin: The ratios show that the company has the ability to produce goods at low cost with high sales from 2021
    onwards. It is favorable for the financial stability of the company.
    Operating Profit Margin: The slight increase in Operating Profit Margin reflects that the company is more efficient in cost
    management.
    Return on Assets: The increase in Return on Assets indicates that the company is generating more profits from all of its resources.
    The increase in Return on Assets indicates that the company is slightly prospering, while the decrease in Return on Assets indicates
    that the company needs more improvements.
    Return on Equity: The ratios were varied. It should be higher for the company to use equity provided by the stockholders during
    those specific years effectively and using it will generate more equity for the owners.

    FRANCHISOR’S RATIO ANALYSIS


    RATIO FORMULA YEAR ENDED
    2019 2020 2021 2022 2023

    PROFITABILITY RATIOS
    𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑓𝑡𝑒𝑟 𝑇𝑎𝑥
    Net Profit Margin 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 0.257 0.343 0.341 0.334 0.322
    𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡
    Gross Profit Margin 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 0.699 0.819 0.808 0.791 0.769
    𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡
    Operating Profit
    Margin 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 0.510 0.756 0.754 0.744 0.726
    𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑓𝑡𝑒𝑟 𝑇𝑎𝑥
    Return on Assets 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 0.719 0.844 0.675 0.564 0.484
    𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑓𝑡𝑒𝑟 𝑇𝑎𝑥
    Return on Equity 𝐸𝑞𝑢𝑖𝑡𝑦 0.357 0.382 0.306 0.253 0.215
    ANALYSIS

    Net Profit Margin: It shows that the company has the ability to pay its taxes. It means that the company is efficient in converting its
    sales into actual profit and its cost control is efficient.

    Gross Profit Margin: The ratios show that the company has the ability to produce goods at low cost with high sales. It is favorable
    for the financial stability of the company.

    Operating Profit Margin: The slight increase in Operating Profit Margin reflects that the company is more efficient in cost
    management.

    Return on Assets: The slightly increase in Return on Assets indicates that the company is generating more profits from all of its
    resources in the year 2020 as compared to the year 2019. This increase also indicates that the company is slightly prospering and
    needs more improvements.
    Return on Equity: The ratios were varied. It should be higher for the company to use equity provided by the stockholders during
    those specific years effectively and using it will generate more equity for the owners.

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