Ratio Analysis 1: Profitability (2)

Here is part of the profit and loss account for Marks & Spencer for two years. Compare these results by calculating the ratios named below and discuss what you find.

1. Gross profit margin
2. Operating profit margin

Consolidated profit and loss for the year	Marks & Spencer plc
	2002	2001
	£m	£m
Turnover	8,135.4	8,075.7
Cost of sales	-6,862.5	-7,154.3
Gross profit	1,272.9	921.4
Operating expenses	-629.1	-480.9
Operating profit	643.8	440.5

Additional notes are available on advanced profitability or you can move on to the Rate of Return section.

Profitability - Additional Question 2

J Sainsbury plc has published the following two years' worth of turnover and profit information. Calculate the following ratios and make comments on what you find.

1. Gross profit margin
2. Operating profit margin
3. Net profit before interest and taxation margin

Consolidated profit and loss account	J Sainsbury plc
for the year ended	30-Mar-02	30-Mar-01
	£m	£m
Turnover	17,162	17,244
Cost of sales	-15,905	-16,082
Gross profit	1,257	1,162
Other selling and distribution costs	-632	-629
Operating profit	625	533
Other costs/income	-5	-20
Profit before interest and taxation	620	513

Profitability - Additional Question 3

Go to the database and find the data for the Hilton Group plc and calculate and comment on the following ratios for the two years for which data is available:

1. Gross profit margin
2. Operating profit margin
3. Net profit before interest and taxation margin

Profitability - Additional Question 4

Go to the database and for any business you wish, calculate the following ratios from the data you find there and comment on your findings:

1. Gross profit margin
2. Operating profit margin
3. Net profit before interest and taxation margin

Did you get this?

Additional notes are available on advanced profitability or you can move on to the Rate of Return section.

Source:
http://www.bized.co.uk/