2002 CBS Casebook_10 - PD PD F- XC h a n g e Vi e w F- XC h...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Columbia Business School Management Consulting Association Guidebook 2002 10 Please do not duplicate, copy, print or photocopy Item Formula Comments Profit Margin OR Return on Sales (ROS) Net Income Net Sales Earnings squeezed out of each dollar of sales. Reflects pricing strategy and ability to control operating costs. Summarizes income statement performance. Companies that add significant value to a product can demand high profit margins. But, adding value to a product usually requires lots of assets. A high profit margin isn’t necessarily better than a lower one, it depends on the combined effect of the profit margin and asset turnover. See ROA. Falling sales will produce major profit declines in a high-fixed-cost business. Return On Assets (ROA) (%) Net Income Assets Measure of efficiency with which company allocates and manages its resources. Describes operations independent of capital structure.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/08/2009 for the course CBS casebook taught by Professor Professor during the Spring '09 term at Acton School of Business.

Ask a homework question - tutors are online