Ratio Analysis The Vanguard Group, Thesis

e) Total asset turnover = Revenues / Assets = 1,680,000 / 1,250,000 = 1.34 lower that its previous values in 2005 and 2006 and also inferior to the industry average, meaning that the financial service organization has revealed a reduced ability to generate sales through assets.

f) Debt ratio = Total Debt / Total Assets = 666,250 / 1,250,000 = 53.30% - reduced comparative historical evolutions meaning that the company's strength has increased as reliance on debt has been reduced; however, comparative to the industry average, the ratio remains superior, meaning that Vanguard relies on debt more than any other organizations

g) Times interest earned = EBIT / Interest Charges = 70,720 / 15,600 = 4.53 -- this is the highest ratio registered by Vanguard so far to reveal its strength. Significantly higher than its past values and the industry average, the times interest earned...

...

ned reveals that the company is highly capable to pay its debts.
h) Gross profit margin = (Revenues -- COGS) / Revenues = (1,680,000 -- 1,362,480) / 1,680,000 = 18.90% -- lower than past values and industry average meaning that the company gets to retain fewer dollars in profits after the sale of its products and the deduction of the costs incurred

i) Operating profit margin = Operating Income / Net Sales = 86,320 / 70,720 = 1.22 -- significantly lower than its past values as well as the industry average, meaning that operational efficiency at Vanguard is reduced

j) Net profit margin = Net Profit / Net Revenues = 42,432 / 70,720 = 0.6 -- also lower than its past values and the industry average, meaning that in 2007, the financial service organization has been only limitedly able to control its costs

k) Return on investment = Net Profits / Total…

Sources Used in Documents:

Reference:

Investopedia, http://www.investopedia.com last accessed on June 3, 2009


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