- What is your assessment of Dominos financial performance over the 2017 2019 period? (Use the financial ratios in the Guide to Case Analysis when doing your financial analysis. Show your calculations.) If figures are not available for a ratio you do not have to do it but please do all that you can and do not use any other sources . Please use the formulas given
2019 2018 2017 2016 2015 $1,435,410 17,433 (451,768) (292,439) (24,560) (62,785) (49,512) (14,004) (150,999) (68,827) (24,636) (20,666) $1,153,952 19,529 (385,675) (242,340) (20,833) (53,537) (44,318) (10,276) (49.704) (59,564) (21,406) (17,889) $790,861 18,566 (354,127) (239,471) (19.776) (46,369) (39,943) (5.491) (49.220) (52,282) (21,799) (17,760) $705,702 9,758 (286,069) (217,703) (19,225) (38,129) (36,683) (3,297) (48,251) (46,655) (19,785) (15,486) $539,138 6,444 (213,059) (172,112) (18,278) (27,480) (27,252) (2.451) (43,733) (37,640) (16,841) (10,927) Continuing Operations: Revenue Other gains and losses Food, equipment and packaging expenses Employee benefits expense Plant and equipment costs Depreciation and amortisation expense Occupancy expenses Finance costs Marketing expenses Royalties expense Store related expenses Communication expenses Acquisition, integration, conversion and legal settlement costs Other expenses Profit before tax Income tax expense Profit for the period from continuing operations Profit is Attributable to: Owners of the parent Non-controlling interests Total profit for the period Earnings per Share from Continuing Operations: Basic (per share) Diluted (per share) (46,216) (87,018) 159,413 (45,034) (20,934) (72,529) 174,476 (52,783) (28,384) (66,389) 150,680 (44,876) (12,735) (70,139) 125,819 (39,227) (41,268) 97.840 (29,419) $ 114,379 $ 121,693 $105,804 $ 86,592 $ 68,421 115,912 (1,533) 114,379 121,466 227 121,693 102,857 2,947 105,804 82,427 4,165 86,952 64,048 4.373 68,421 $1.355 $1.354 $1.394 $1.39 $1.16 $1.147 $0.944 $0.922 $0.742 $0.728 Profitability Ratios 1. Gross profit margin 2. Operating profit margin (or return on sales) 3. Net profit margin (or net return on sales) 4. Total return on assets Sales - Cost of goods sold Shows the percentage of revenues available to cover Sales operating expenses and yield a profit. Higher is better and the trend should be upward. Sales - Operating expenses Shows the profitability of current operations without Sales regard to interest charges and income taxes. Higher is or better and the trend should be upward. Operating income Sales Profits after taxes Shows after-tax profits per dollar of sales. Higher is Sales better and the trend should be upward. Profits after taxes + Interest A measure of the return on total monetary investment Total assets in the enterprise. Interest is added to after-tax profits to form the numerator since total assets are financed by creditors as well as by stockholders. Higher is better and the trend should be upward. Profits after taxes A measure of the return earned by stockholders on the Total assets firm's total assets. Higher is better, and the trend should be upward. Profits after taxes Shows the return stockholders are earning on their Total stockholders' equity capital investment in the enterprise. A return in the 12-15% range is "average," and the trend should be upward. Profits after taxes A measure of the return shareholders are earning Long-term debt on the long-term monetary capital invested in the + Total stockholders' equity enterprise. A higher return reflects greater bottom-line effectiveness in the use of long-term capital, and the trend should be upward. Profits after taxes Shows the earnings for each share of common stock Number of shares of common outstanding. The trend should be upward, and the stock outstanding bigger the annual percentage gains, the better. 5. Net return on total assets (ROA) 6. Return on stockholder's equity (ROE) 7. Return on invested capital (ROIC) sometimes referred to as return on capital employed (ROCE) 8. Earnings per share (EPS) Liquidity Ratios 1. Current ratio 2. Working capital Current assets Shows a firm's ability to pay current liabilities using Current liabilities assets that can be converted to cash in the near term. Ratio should definitely be higher than 1.0; ratios of 2 or higher are better still Current assets - Current liabilities Bigger amounts are better because the company has more internal funds available to (1) pay its current liabilities on a timely basis and (2) finance inventory expansion, additional accounts receivable, and a larger base of operations without resorting to borrowing or raising more equity capital Leverage Ratios 1. Total debt-to-assets ratio Total debt Total assets 2. Long-term debt-to- capital ratio Long-term debt Long-term debt + Total stockholders' equity Measures the extent to which borrowed funds have been used to finance the firm's operations. Low fractions or ratios are better-high fractions indicate overuse of debt and greater risk of bankruptcy. An important measure of creditworthiness and balance sheet strength. Indicates the percentage of capital investment which has been financed by creditors and bondholders. Fractions or ratios below 25 or 25% are usually quite satisfactory since monies invested Leverage Ratios (Continued) by stockholders account for 75% or more of the company's total capital. The lower the ratio, the greater the capacity to borrow additional funds. Debt-to capital ratios above 50% and certainly above 75% indicate a heavy and perhaps excessive reliance on debt, lower creditworthiness, and weak balance sheet strength. 3. Debt-to-equity ratio Total debt Should usually be less than 1.0. High ratios Total stockholders' equity (especially above 1.0) signal excessive debt, lower creditworthiness, and weaker balance sheet strength. 4. Long-term debt-to- Long-term debt Shows the balance between debt and equity in the equity ratio Total stockholders' equity firm's long-term capital structure. Low ratios indicate greater capacity to borrow additional funds if needed. 4. Times interest-eared Operating income Measures the ability to pay annual interest charges. (or coverage) ratio Interest expenses Lenders usually insist on a minimum ratio of 2.0, but ratios above 3.0 signal better creditworthiness. Activity Ratios 1. Days of inventory Inventory Measures inventory management efficiency. Fewer days Cost of goods sold + 365 of inventory are usually better. 2. Inventory turnover Cost of goods sold Measures the number of inventory turns per year. Inventory Higher is better 3. Average collection Accounts receivable Indicates the average length of time the firm must wait period Total sales revenues + 365 after making a sale to receive cash payment. A shorter or collection time is better Accounts receivable Average daily sales Other Important Measures of Financial Performance 1. Dividend yield on Annual dividends per share A measure of the return that shareholders receive in common stock Current market price per share the form of dividends. A typical" dividend yield is 2-3%. The dividend yield for fast-growth companies is often below 1% (maybe even 0); the dividend yield for slow- growth companies can run 4-5% 2. Price-earnings ratio Current market price per share P-e ratios above 20 indicate strong investor confidence Earnings per share in a firm's outlook and earnings growth; firms whose future earnings are at risk or likely to grow slowly typically have ratios below 12. 3. Dividend payout ratio Annual dividends per share Indicates the percentage of after-tax profits paid cut as Earnings per share dividends. 4. Internal cash flow After tax profits + Depreciation A quick and rough estimate of the c business is generating after payment of operating expenses Interest, and taxes. Such amounts can be used for dividend payments or funding capital expenditures. 5. Free cash flow After tax profits + Depreciation - A quick and rough estimate of the cash a company's Capital expenditures -- Dividends business is generating after payment of operating expenses, interest, taxes, dividends, and desirable reinvestments in the business. The larger a company's free cash flow, the greater is its ability to internally fund new strategic initiatives, repay debt, make new acquisitions, repurchase shares of stock, or increase dividend payments
