Return on assets (ROCE) Primary Ratio = Operating profit/Total assets
2008: 398/8,895=4.47%
2007: 286/11,338=2.52%
Cadbury’s ROCE is showing a good trend .The operating profit is somewhat increasing, which can be also proved by operating profit margin. We can break it down between the profitability of sales (the operating profit margin) and the level of sales revenue achieved from the assets (the asset turnover), since ROCE = operating profit margin * assets turnover.
Operating profit as a percentage of sales (profit ratio)
Profit ratio=operating profit/Sales
2008:398/5384=7.39%
2007:286/4,699=6.09%
In year 2008 the operating profit margin is 7.4%, which means Cadbury makes 0.74 pounds for every pound of sales. We can witness an increase from 2007 to 2008 that indicates the EBIT is growing by a larger proportion than the operating costs such as wages, raw materials. Though the operating profit is enough to pay the interest on debt, which can be proved by interest times cover, the operating profit ,when expressed as a percentage of sales , is not high, maybe Cadbury should control the costs and expenses associated with their normal business operations more effectively.
Asset turnover
Asset turnover=sales/operating assets
2008:5,384/8,895=60.53%学生成绩管理系统论文
2007:4,699/11,338=41.44%
The asset turnover accrued by a small margin from 2007 to 2008 .Without comparing with the competitors ,it’s hard to say whether the efficiency of Cadbury’s using of its assets in generating sales
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