Strengths and weaknesses of Rolls Royce Essay Example | Topics and Well Written Essays - 1750 words

Strengths and weaknesses of Rolls Royce - Essay Example This research will begin with the statement that Rolls Royce has been a pioneer in the motor car market for over 100 years. It continues to set the standard for motor cars in the industry. Financial ratios help to analyze the financial health of a company. Gross profit margin is an indicator of how %age of a sales dollar is left after the payment of the goods has been made. It is the actual markup on the goods sold. It is better for the company if it has a higher gross profit margin. Rolls Royce gross profit margin has been stable for the past 5 years. There hasn’t been much change in the gross profit margin of the company. This means that with respect to each unit of the product the margin has been consistent and hence the company has been effectively maintaining the process of manufacturing of goods. Operating profit margin indicates the profit margin after payment is made for goods as well as its fixed expenses and other variables. This again has been stable for Rolls Royce with no sharp changes. This means that company understands its business very well and is very effective in managing it. The company has knows how to efficiently manage the various processes of its business. Net Profit margin is the actual measure of a company’s financial success. Net profit margin indicates how profitable the company is. Therefore, higher the net profit margin more profitable the company is. Rolls Royce’s performance with respect to net profit margin has been very inconsistent over the past 5 years.