A.

Profitability Ratios

The profitability ratios measure the combined effects of liquidity, asset management, and debt
management.

a) Gross Profit Margin

Gross Profit
×100 = Gross profit margin
Net Sales

YEAR 2022 2021 2020

7-ELEVEN 33.65% 30.54% 32.65%

myNEWS 28.01% 27.03% 28.43%

Gross Profit Margin

40

35

30

25

20

15

10

0
2022 2021 2020

7-ELEVEN myNEWS Industry Index

In 2020, it shows that 7-ELEVEN has higher Gross Profit Margin ratio which is 32.65%
compared to myNEWS which is 28.43%. Thus, for every RM 1 of sales, 7-ELEVEN can
make RM 0.32 while myNews can only make RM 0.28. From 2020 to 2021, the trend for
gross profit margin in both companies are decreasing from year to year with 7-ELEVEN from
32.65% to 30.54% and myNEWS from 28.43% to 27.03%. This shows that both companies’
performance is poor than the previous year in term of sales and might be because of the
economic downturn. However, in 2022 shows that both companies had better ratio with 7-
ELEVEN 32.65% while myNEWS is 28.01%. The industry index is 23.58% and both
companies have higher and better ratios. For overall, 7-ELEVEN has better ratio in gross
profit margin than myNEWS.

b) Return on Total Asset

Earning after tax

× 100 = Return on total assets
Total assets

YEAR 2022 2021 2020

7-ELEVEN 3.15% 2.60% 1.71%

myNEWS 3.76% 9.96% 3.01%

Return on Total Assets

12

10

0
2022 2021 2020

7-ELEVEN myNEWS Industry Index

For 2020, the return on total assets for myNEWS’s is 3.01% which is higher than 7-
ELEVEN that can only have 1.71%. It shows that myNEWS still efficient in manage their
resources to produce a profit in that year. In 2021, 7-ELEVEN’s ratio starts to increase
which is 2.60% but can’t surpass myNEWS ‘s ratio at 9.96%. myNEWS has better
productivity of assets in producing revenues compared to 7-ELEVEN even though both
companies have an increasement in that year. It shown in the year 2022, 7-ELEVEN’s
ratio is increasing to 3.15% but still can’t surpass myNEWS at 3.76% even though
myNEWS’ ratio decreases in that year. It shows that the industry index for return on total
assets I 5.14% and both companies does not achieve the target ratio in 2020 and 2022.
However, in 2021 myNEWS has surpass the industry index ratio while 7-ELEVEN ratio
is still under the industry index ratio. This concludes that myNEWS are better in terms of
 productivity of assets in producing revenues and the firm’s ability to control cost in its
operations compared to 7-ELEVEN.
c) Operating Profit Margin

Earning before interest ∧taxes

× 100 = Operating profit margin
Total Sales

YEAR 2022 2021 2020

7-ELEVEN 3.74% 3.30% 2.47%

myNEWS 3.33% 13.55% 2.88%

Operating Profit Margin

16

14

12

10

0
2022 2021 2020

7-ELEVEN myNEWS Industry Index

7-ELEVEN has a constant increase for three years in operating profit margin ratio compare to
myNEWS that is increasing in 2020 and 2021 but the ratio starts to decrease in 2022. Even
though 7-ELEVEN had a constant increasement, it still can’t surpass myNEWS in 2020 and
2021 with 7-ELEVEN’s ratios are 2.47% in 2020 and 3.30% in 2021 while myNEWS’ ratios
are 2.88% in 2020 and 13.55% in 2021. It shows that myNEWS has better ability to control
lower cost structure and has higher profit. However, in 2022 7-ELEVEN’s ratio 3.74% finally
defeat myNEWS’ ratio 3.33%. The industry index for operating profit margin is 4.82% and
both companies doesn’t surpass the ratio except for myNEWS for 2021. This can conclude
that myNEWS has better productivity of assets in providing returns to both creditors and
stockholders compared to 7-ELEVEN.