Individual Portion of Group Project Assignment Example | Topics and Well Written Essays - 1000 words

Individual Portion of Group Project - Assignment Example yr 2011 Profit Margin = (864 / 13,198) * deoxycytidine monophosphate = 6.55% Question 29 a. Days in gillyflower = (Average Inventory / COGS) * 365 b. class 2012 Average Inventory = (1,365 + 1,174) / 2 = 1,269.5 Days in Inventory = (1,269.5 / 8,763) * 365 = 52.88 days c. Year 2011 Average Inventory = (1,174 + 1,056) / 2 = 1,115 Days in Inventory = (1,115 / 8,046) * 365 = 50.58 days Profit Margin Profit borderline is integrity of the most important financial metrics that helps to evaluate the returns making qualification of the confederacy. It measures the capacity of the company to control its direct and indirect costs. The balance is normally classified as a profit skill ratio and calculated as Profit Margin = (Net Income / Net Sales) * 100% Kelloggs make profit edge improved in 2012 by 20 basis points. The company contributed 6.77c in 2012 as comp ared to 2.55c in 2011 to the dough income for every unit dollar sale s made. The improvement in the margin was due to the company ability to control its indirect write downs in 2012. The company was able to push down its selling and administrative expenses by 100 basis points despite an increase in the sales figure. However, the increase in the solve profit margin could have been higher if the company had been able to control the growth in the direct costs. The cost of goods exchange as a percentage of net sales increased by 70 basis points which in the long run reduced the gross margin of the company. Another entity that reduced the profitability of Kellogg was the high interest expense. The company is highly leveraged and pays a massive amount as interest each other. In 2012, the company paid $261 cardinal as interest expense as compared to $231 million in 2011. (SEC 2013) The increase in the profitability entrust have a positive impact on the Kellogg operations. It will allow the company to retain to a greater extent of the earnings and inv est in the company operations. This will allow the company to expand into the new markets each year and increase the profits of the company in the following year. Similarly, the increase profitability impacts the investors psyche they are more prone to invest in the company with better margins and payout ratios. The management at Kellogg needs to efficaciously control its growing direct costs. The resulting decrease in the cost of goods sold will increase the profit margin. Likewise, it needs an effective and efficient inventory management system that will allow the company to reduce its inventory costs as well. Similarly, the company needs to efficiently reduce its selling and administrative expense which will again directly affect the profits. Kraft is one of the biggest competitors to Kellogg in the food products industry. Kraft contributed 9.0c in 2012 as compared to 9.5c in 2011 to the net income for every unit dollar sales made. Although, Krafts net profit margin declined in 2012 by 50 basis points it still has a better net profit margin compared to the Kellogg. (MSN Money, 2013) The main reason behind the high margin is the companys ability to control its direct costs as well as indirect costs. With higher margins and profits, the company reinvests a massive amount to expand and test the new markets. Similarly, these margins allow the company to maintain an effective publicize plan to stay at the top of the consumers mind. (MSN Money, 2013) Works Cited Bloomberg Businessweek. KELLOGG CO (KNew York) Stock abduce & Company Profile.