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  • ec52 replied to the topic Discussion Topic: Exercise your research skills in the forum Business 101 7 years, 6 months ago

    I did some research on Medtronic, these are my findings:

    Gross Profit Margin = indicates the percentage of revenue available to cover operating and other expenditures: 0.6873 (2017), 0.6829 (2016), 0.6886 (2015). For last three years this ration stayed pretty much stable with slight GPM deterioration between 2015 and 2016, but improved in 2017 not reaching 2017 level.

    Operating Profit Margin = a profitability ration calculated as operating income divided by revenue: 0.1794 (2017), 0.1835 (2016), 0.1859 (2015). OPM deteriorated from 2015 to 2017 which indicates deficiency controlling costs and expenses associated with business operations. Compared to a margin of 25% which is considered favorable by most analysts the company is not doing so well.

    Net Profit Margin = an indicator of profitability, calculated as net income divided by revenue: 0.1356 (2017), 0.1227 (2016), 0.1320 (2015). NPM deteriorated between 2015 and 2016, but then improved from 2016 to 2017 exceeding 2015 level. Meaning that the company is doing a better job this year converting revenue into profits than the last two years.

    Return on Equity = A profitability ration calculated as net income divided by shareholders’ equity: 0.0801 (2017), 0.0680 (2016), 0.0503 (2015). ROE has increased since 2015, although it is relatively low compared to other companies researched in this forum.

    Return on Assets = A profitability ration calculated as net income divided by total assets: 0.0404 (2017), 0.0355 (2016), 0.0251 (2015). ROA has increased since 2015, although it is relatively low compared to other companies researched in this forum.

    Reference:
    https://www.stock-analysis-on.net/NYSE/Company/Medtronic-PLC/Ratios/Profitability