Assignment 1: discussion—performance measurements | Business & Finance homework help
Financial Performance Measures:
1. Return on Investment (ROI): This is the ratio of a company’s net profit over its total investments. It indicates how well the company is utilizing its investments and is an important measure of financial performance.
2. Gross Profit Margin (GPM): This measures the percentage of sales remaining after subtracting the cost of goods sold. A higher GPM indicates that more money is available to cover overhead costs and provide profits to owners or shareholders.
3. Net Operating Profit Margin (NOPM): This measures the amount of operating income made after all expenses have been deducted from gross income, including taxes and interest payments, divided by total revenue earned. A higher NOPM indicates that a business is efficiently operating at a high level of profitability without taking into account any extraordinary gains or losses due to one-time events such as mergers or acquisitions.
4. Earnings Per Share (EPS): This measure divides a company’s profit by its number of outstanding shares in order to compare companies within an industry and gauge their overall financial health relative to each other. A higher EPS means that the company has better profits compared with others in its sector, which may indicate strong growth potential for investors who buy stock in this firm
5. Cash Conversion Cycle (CCC): This metric describes how long it takes for a business to convert raw materials into cash through sales activity while also taking into account time spent paying suppliers and waiting on customers to pay their invoices, as well as any financing arrangements used by the business during this process.. By understanding their CCC, businesses can make sure they are not tying up too much capital in inventory or accounts receivable while still having enough funds available for operations and growth initiatives