easure of income dollars generated by every dollar of sales. When judging the four companies, a high net profit margin ratio is favorable. Outside forces may attribute to a lower ratio, but ultimately the higher the ratio the better. To calculate the net profit margin one must divide the net income before minority share of earnings and nonrecurring items by the net sales. Net Income Before Minority Share of Net Profit Margin = Earnings and Nonrecurring Items Net SalesThe following figure compares the net profit margin of the companies analyzed. Figure 4 - Net Profit MarginIn the last four years, Walgreens has led its competitors in net profit margin. In 1999, the net profit for drugstore.com was -332 percent which is typical for a dot com startup.Return on AssetsThe return on assets is also another means to measure profitability. With this ratio a creditor or an investor can measure how well a company utilizes its assets to create revenue. Since this ratio is based on an average of total assets, the value of the total assets for two consecutive years is needed to calculate this ratio. To calculate the return on assets ratio, the following formula must be used: Net Income Before Minority Share of Return on Assets = Earnings and Nonrecurring Items Average Total AssetsA higher percentage indicates the company’s ability to create a profit by utilizing its assets. The following figure illustrates the return on assets for the companies analyzed. Figure 5 - Return on AssetsAs seen in the above figure, Walgreens has the highest ratio between 1996 and 1999, with an average of 11.2 percent. In 1999, the return on assets for drugstore.com was -55 percent which is typical for a dot com startup.Analysis of the Mission StatementA mission statement is the single most important statement that a company can produce. Also called a strategic vision, this statement encompasses not only w...
