Profitability Ratios Find the following ratios from the 2014 Adidas Annual Repor

Question

Profitability Ratios

Find the following ratios from the 2014 Adidas Annual Report. The five ratios I want you to use is, Profit Margin on Sales (Net income / Net Sales), Return on Assets ( Net income / Average total assets), Return on common stock equity ((Net income - preferred dividends) / Average common stockholders equity), Earnings per share ( (Net income - preferred dividends) / Weighted average number of shares outstanding), andPayout Ratio (Cash dividends / Net Income).

2014 Annual Report: http://www.adidas-group.com/media/filer_public/2b/2f/2b2fd619-5444-4ee8-9c07-baa878d658c4/2014_gb_en.pdf

Explanation / Answer

Refer page number 199 of the annual report for consolidated Income statement,

1) Profit Margin on Sales : Net Income / Net Sales = 496 / 14534 = 3.4%

So if you compare this with last year's ratio it has came down from 5.6% which is 2.2% of drop which is very considerable.

2) Return on Assets ( Net income / Average total assets):

Net income will be same as above i.e. 496

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