Profitability, ROCE, Gross profit margin,Operating margin, Net profit Assignment

Profitability, ROCE, Gross profit margin,Operating margin, Net profit of British airways and Lufthansa - Assignment ExampleTherefore, double back on capital employed ratio indicates the return generated by every investment made as capital employed. Concerning British airways, in 2012 and 2013, ROCE was 1.31% and 3.95% respectively. This means that in the year 2012, 1.31% of the companys net profit was generated by the companys capital employed. However, the companys ROCE increased to 3.95 % in the year 2013 out-of-pocket to an increase in the net profit by 197 million. ROCE can be used to determine the viability of a project. In order to maintain a higher(prenominal) level of ROCE, the company should improve its cost reduction strategies to increase the level of net profit. Comparatively, Lufthansa airways ROCE in the year 2012 and 2013 was 6.6% and 1.8 % respectively. The decrease in Lufthansas ROCE between the both years is attributed to a sharp decrease in the companys net pro fit. this sharp decrease was caused by an increase in the operating activities. Therefore, in the year 2013, British airways had a higher ROCE than Lufthansa airways for the reason that Lufthansa airways had a higher proportion of net assets to net profit. Consequently, British airwayss net assets generated more returns than Lufthansas (Duncan 2009, pp. 42-44).Gross profit margin the ratio indicates a companys financial health after meeting the cost of gross sales. It also indicates the companys ability to pay for future operating costs. Concerning British airways, the ratio for 2012 and 2013 are 95.8% and 96.2% respectively. This means that in the year 2013, 96.2 % of the total revenue were gross profit, whereas, the remaining 3.8% of sales were consumed by costs related to sales. The ratio increased compared to that of the previous year. The increase is attributed to a more than proportionate increase in the gross profit. From this analysis, it can be concluded that British airw ays level of production efficiency is high due to the effective management of cost related to sales. Comparatively, the