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Profitability - examples AO2, AO4

Supermarkets and fine art dealers

Profit and profitability vary considerably from industry to industry. Consider the example of a national supermarket, and a New York Fine Art Gallery. They differ in many ways shown in the table below

Supermarket chain Fine Art Dealer
Turnover Very high Low
Profit to sales Low High
Capital employed Low High
ROCE High Low

How well is each one doing? We need to see many accounts, plus information for other firms in the same industry. All ratios are relative.



Now really is the time for you to go and collect some data. Work on the web and find the profitability ratios for as many firms as you can. One possible source to get hold of the ratios and some practice is the Biz/ed ratio analysis section. Pick ones in a range of industries. The shares page in a good newspaper will also give you a lead. Use their headings; there are many of them.