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Profitability, Efficiency And Liquidity Of Domino’s Pizza Enterprises Limited From 2007 To 2011

795 words - 4 pages

Friday, May 11, 2012Profitability, Efficiency and Liquidity of Domino’s Pizza Enterprises Limited from 2007 to 2011
Report prepared for Domino’s Pizza Enterprises LTD Shareholders

This document has been prepared for Domino’s Pizza Enterprises LTD shareholders, informing them about the Efficiency, Profitability and Liquidity of the company over the years 2007 to 2011. Efficiency, profitability and liquidity is determined by profitability ratios of the company, which will be compared to industry averages.
Profitability, Efficiency and Liquidity of Domino’s Pizza Enterprises Limited from 2007 to 2011
Report prepared for Domino’s Pizza Enterprises LTD Shareholders

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The low profitability of the company could be attributed to a number of reasons, for example high costs and expenses in producing, supplying and marketing products to the consumers.
The figures also show an increase in profitability of the company over the five years but the trend is also apparent in the industry averages over the years 2008 to 2011 as well.
The company would have to cut costs in all areas and/or increase sales prices to achieve a profitability level closer to that of the industry average.
| 2007 | 2008 | 2009 | 2010 | 2011 |
Domino’s Pizza | 6.37% | | | | |
| | | | | |
Figure 1Net Profit (EBIT) Ratio of Domino’s Pizza and the Industry averages 2007 to 2011
Net Profit (EBIT) Ratio of Domino’s Pizza and the Industry averages 2007 to 2011

| 2007 | 2008 | 2009 | 2010 | 2011 |
Domino’s Pizza | 6.37% | 8.08% | 8.58% | 9.89% | 11.85% |
Industry Averages | 40.64% | 25.93% | 28.4% | 33.28% | 36.67% |
Figure 2

Efficiency
Efficiency of a company is how effective a company uses its assets to produce a return. Return on Assets ratio is calculated by dividing the return by the assets owned by the company, these values are shown in figure 3 and 4.
There is not a large difference between the return on asset ratios of Domino’s Pizza and the industry averages; this shows the company is achieving an efficiency level similar to the industry average.
The figures also show a yearly improvement in...

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