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Comparison
In 2012 Although CK only had 2% in net profit margin, their gross profit margin was at 11% shows that they were able to meet obligations even if unforeseen. ITD had a similar gross profit margin, but brought in less profit at .27% Finally STEC seemed to be the best having the most profit margin while bordering near both CK and ITD in gross margin.
In 2013 you’ll see that CK booms in profit at 18% margin while maintaining similar gross margin this is an extremely good sign. Just by looking at these figures one can tell that CK was able to pull in huge profit with the same amount of revenue numbers as ITD, meaning their product had a lower COGS. ITD did similar revenue numbers as CK but was only able to do 2% profit margin in 2013, an extreme spread when you compare the two margins. For STEC in 2013, not much changed in revenue and not much changed in net profit margins so it seems the company didn’t fluctuate much.
Definition Net Profit Margin
"Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Profit margin is displayed as a percentage; a 20\% profit margin, for example, means the company has a net income of $0.20 for each dollar of sales. Looking at the earnings of a company often doesn't tell the entire story. Increased earnings are good, but an increase does not mean that the profit margin of a company is improving. For instance, if a company has costs that have increased at a greater rate than sales, it leads to a lower profit margin. This is an indication that costs need to be under better control."
Definition Gross Profit Margin
The gross margin is not an exact estimate of the company's pricing strategy but it does give a good indication of financial health. Without an adequate gross margin, a company will be unable to pay its operating and other expenses and build for the future. In general, a company's gross profit margin should be stable. It should not fluctuate much from one period to another, unless the industry it is in has been undergoing drastic changes which will affect the costs of goods sold or pricing policies.
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