The return on assets refers to profitability ratio indicating the company’s ability to effectively use the invested assets in generating earnings attributable to the company’s shareholders. Return on assets is a main company’s profitability index which describe in detail the amount of company’s earnings in each dollar of the assets invested[ CITATION Ali13 \l 1033 ]. The higher the company’s return on assets describes management efficiently utilizing company assets to generate earnings.
X
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Return on Assets Ratio
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Amounts in US$ Millions
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Year's
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2013
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2012
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2011
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2010
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EBIT
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31,769
|
19,769
|
39,815
|
-3,702
|
Total Assets
|
305,690
|
300,466
|
293,068
|
272,262
|
Return on Assets Ratio
|
10.39%
|
6.58%
|
13.59%
|
-1.36%
|
BP Company’s return on assets ratio reveals a fluctuating trend where in financial year 2012 leads with 13.59%. The company’s profitability increases from -1.36% to 13.59% in year 2011 while decreases to 6.58% towards 2012. In 2013 the company’s reveals that management facilitate control of its assets to enhance profitability[ CITATION Tho09 \l 1033 ]. However, this describes that management need to enhance managerial control on the assets to promote profitability.
BP Company’s efficiency ratios refers to the financial ratios utilizes in measuring the adeptness and effectiveness of the company in proficiently making use of the internal assets and mitigating the financial liabilities to increase its financial health. The efficiency ratios unveils the management initiatives of the company in enhancing advance competence in complying with the predetermine measures in enhancing the company’s operational incentives over the financial period. BP Company efficiency ratios includes asset turnover and day’s inventory turnover.
Asset turnover ratio refer to the efficiency ratio describing the company’s efficiency in utilizing its assets investment to increase its earning in product or service sales[ CITATION Cha10 \l 1033 ]. The asset turnover ratio measures the company’s management efficiency in utilizing its assets to vitalize the company’s sales in relation to the competitors. Asset turnover ratio enhances an analytical measures of the assets productivity of the company to the interested users such as potential investors as well company’s stakeholders.
Assets Turnover ratio =
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Asset Turn Over Ratio
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Amounts in US$ Millions
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Year’s
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2013
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2012
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2011
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2010
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Sales
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379,136
|
375,765
|
375,517
|
297,107
|
Total Assets
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305,690
|
300,466
|
293068
|
272,262
|
Asset Turnover
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1.24
|
1.25
|
1.28
|
1.09
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