Carlos Carmona
January 22, 2012
Benedictine University
C4-4
Please See addicted Excel Document
C5-1
1. Which order was the more winningsable in 2006? (Hint: comparability ROE and ROA performance for the both grocery retailers.)
Concentrating first function on a comparing ROE, the Kroger Company performed better than Safeway in 2006. This is because Krogers ROE was 23.9% in comparison to 16.4% for Safeway. Nevertheless, the ROA outcome of the two companies that grade was very similar.
1. In at 6.4% for Kroger
2. In at 6.0% for Safeway
2. What was the likely source of that companys superior profit performance in 2006? (Hint: Decompose ROE and ROA into their individual agent parts.)
When we find the answer to the first question we already realize that much of Krogers higher ROE performance in 2006 is found as a beneficial effect of pecuniary leverage. Here are the findings for question 2:
1. The CLM (Combined Leverage Multiplier) for Kroger that year was 3.720 (= 4.477 financial structure leverage X 0.831 common mesh leverage). In contrast to a CLM of 2.745 for Safeway.
2. Kroger has greater ROA performance at 6.4% in comparison to 6.0%. However they do have a weaker profit margin at 2.0% vs. 2.4%.
Kroger overpowers this profit margin flunk by displaying quicker asset turnover at 3.171 (Kroger) vs. 2.509 (Safeway).
3. Which company was the more profitable in 2004?
Safeway has superior ROE (14.1%) and ROA (6.4%) in 2004 when compared to Kroger (-2.7% and 5.5%, respectively).
4. Both companies have EBI/Sales margins that hover around 2%. What aspect of the retail grocery industry contributes to such unhopeful margins?
We should explain that there are real amounts of complexity in the retail grocery industry because it is highly competitive; so many compensating factors contribute to the success of entrants. Customers can buy mark or private label items and meats from numerous competing grocery...If you want to grasp a full essay, order it on our website: Orderessay
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