PROFITABILITY RATIOS

analyses the ability of management to

generate adequate profits from use of firm's
capital and assets

a) Gross Profit Margin

b) Operating Profit
Margin
c) Net Profit Margin

a) Gross Profit Margin

measures how much a firm earns from its revenue
less the COGS
2013

2014

2015

gross profit

100%
revenue
10,628.7

100%
10,628.7
100%

gross profit

100%
revenue
11,235.1

100%
11,235.1
100%

gross profit

100%
revenue
11,721.6

100%
11,721.6
100%

Analysis:
the gross profit margin for the three years remains
constant, i.e. 100%
zero cost of goods sold being incurred for every RM 1
revenue earned in each year.
Gross profit margin is not a reliable ratio to be used to
assess the performance of a service-based company due
to the nature of such company to not have direct costs
that are attributable to the services renderred.

b) Operating Profit Margin

measures how much a firm earns from its revenue less its
operating expenses

2013

OI

100 %
revenue
1,373.6

100 %
10,628.7
12.92 %

2014

OI

100%
revenue
1,299.1

100%
11,235.1
11.56%

2015

OI

100%
revenue
1,230.5

100%
11,721.6
10.50%

*OI : Operating

2013

2014 2015

operating revenue operating cost

10,62 11,23
8.7
5.1

11,72
1.6

9,378 10,09
.3
5.1

10,58
8.2

Analysis:
The operating profit margin measures the efficiency of profit
generation of a company, in which has declined
ORthroughtout the years.
For example, OPM of 12.92% for year 2013 implies
that5.71%
the company
%
earns only 12.92 cents of profit for every RM1 revenue generated from
4.33%
its provision of services before taking into account taxation, interest
OC
expense and other income.
7.64%
%
This ratio is a good measure of business performance as it places
emphasis on recurring profits of a business which are not affected
by
4.88%

c) Net Profit Margin

a firm's revenue before deducting corporation tax

2013

PBT

100%
revenue
1,046.0

100%`
10,628.7
9.84%

2014

PBT

100%
revenue
1,105.5

100%
11,235.1
9.84%

2015

PBT

100%
revenue
911.8

100%
11,721.6
7.78%

*PBT: Profit before

2013
PBT
reve
-nue

PBT
%

2014

1,046. 1,105.
00
50
10,62
8.70

2015
911.8
0

11,235 11,72
.10
1.60

5.69%
-17.52%

reve
-nue
5.71%
Analysis:
%
The net profit margin remains constant in 2013 and 2014
4.33%
and declined slightly in 2015.
This implies that the company earned lesser net profit of
7.78 cents in 2015 as compared to 9.84 cents in 2013 and
2014 for every RM1 of its revenue.
This is notably so due to the increase in the company's
finance cost and foreign exchange loss on its borrowings,
which in turn reduces its profit before tax by 17.5%.