Business Financial Analysis Research Paper Example | Topics and Well Written Essays - 2000 words

Business Financial Analysis - Research Paper ExampleThere are currently 1,396 IHOP restaurants in competition with restaurants ilk Dennys offering children menus and discounts for senior citizens serving low to moderate prices.Dine Equity Mission and core value is to become the number one franchiser in the restaurant industry while providing and exceptional customer service by committing to reducing overheads and optimizing on Applebees and IHOP business.According to their last annual report their 1st can stock(a) showed the highest closing price for 2008 and the 4th quarter stock showed the lowest closing price of 2008 compared to 2007 fiscal year highest closing price shown in the 3rd quarter and lowest closing price for 2007 shown in the 1st quarter. Also according to their 2008 annual report there are 5,300 registered holders as of February 17, 2009.In analyzing this companys profitability we willing look at the companys return on assets (ROA), return on equity (ROE), Gross profit primitive profit margin, price earning ratio (PE), divided yield and divided payout ratio.The swinish profit margin has declined from a high of 0.403636 in 2006 to 0.26885 in 2008, this indicates that the profitability of the company is declining over the years, this shows that in the next close the gross profit margin may decline.From the supra panel it is evident that the return on assets has been declining over the years, the value is negative for the year 2007 and ... cost of sales1179811303891208465gross profit433817180668141095gross profit margin0.2688457310.372850.403636The gross profit margin has declined from a high of 0.403636 in 2006 to 0.26885 in 2008, this indicates that the profitability of the company is declining over the years, this shows that in the next period the gross profit margin may decline.b. elapse on assetsReturn on assets indicates the amount of profit generated for each dollar of assets. It is calculated by dividing gain income by total ass etsReturn on assets = net income / total assetsThe following table summarizes the resultsreturn on assets200820072006total income-154459-48044553assets33612173831162768870return on assets-0.045953296-0.000130.057946From the above table it is evident that the return on assets has been declining over the years, the value is negative for the year 2007 and 2008 meaning that the firms profitability has declined and therefore expected to decline in the future.c. Return on equityThe return on equity ratio indicates the rate of return on shareholders equity. It is calculated by dividing net income by the value of share holders equity. Return on equity= net income / equityThe table below summarizes the resultsreturn on equity200820072006total income-154459-48044553equity42767209373289213return on equity-3.611639816-0.002290.154049From the above table it is evident that the return on equity has been declining over the years, the value is negative for the year 2007 and 2008 meaning that the re turns on shareholders equity has declined and is expected to decline in future.d. Price earning ratioThis is another ratio that indicates the profitability of a company, it is a ratio that indicates the price paid by