Question
United Airlines, Restaurant Industry - McDonald's, Automobile Industry - Ford Motors. FORD MOTOR COMPANY: the gross profit ratio is -3.47%, the net profit ratio is
United Airlines, Restaurant Industry - McDonald's, Automobile Industry - Ford Motors. FORD MOTOR COMPANY: the gross profit ratio is -3.47%, the net profit ratio is -1.01%, the return on assets is -0.48%. For MCDONALDS: the gross profit ratio is 38.13%, the net profit ratio is 24.63%, return on assets is 8.99%. UNITED AIRLINES: the gross profit ratio is -41.41%/, the net profit ratio is -46.04%, return on assets is -11.87%.
McDonald's has better financial performance than united airlines and ford during the year 2020. Ford and united airlines have negative returns even though ford has better performance than united airlines. The differences in the industries can be linked to the effects of the Covid-19 pandemic, as all the aviation was kept on hold for a considerable amount of time and also the automobile industry experienced a huge dip in sales as the whole world tried to stay indoors. The restaurant industry did better in this situation, maybe because of the Pandemic
The gross profit ratio represents company return after allowing operating expenses and gross profit ratios to consider profit before interest and taxes and thereby help in understanding the efficiency of the organization. Here the McDonald's company has more GP ratio and also better financial performance in terms of gross profit. The other companies have negative earnings and are struggling to earn the income.
The net profit ratio represents the net earnings after tax on the total sales made by the company. A good ratio indicates better earning capacity after operating and non-operating expenses. If a company is good at earning net profit the higher the ratio will be. Here is the company McDonald's has more net profit ratio while other companies united airlines and ford having negative net profits ratios which will impact the interest of the shareholders while considering an investment in those companies.
The return on Assets- measures the PAT generation capability of the assets by efficient utilization of resources available to the companies. Both companies have negative returns which reveal assets generated poor returns in the year 2020. But MC. Donalds have a positive return on assets. McDonald's has efficient utilization of its assets.
When comparing all the above ratios Company MC.Donalds in the restaurant sector has better financial results with the lesser impact of the covid pandemic and also have positive returns and returns. The other companies in airlines and auto sector companies like united airlines and ford have negative ratios and also negative returns. So the better investment opportunity will be in McDonald's.
When we look at the different industries represented, which of these three would you feel had the most capital invested in fixed assets? Which of the three companies were impacted the most by the virus...both positively and negatively? You mentioned some thoughts about these elements for each company but could you expand a bit more for our discussion? Please cite and include references
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