of 12.48% is a good indicator of high profitability. This shows that not only has Oracles sales profits been above the industry average this past fiscal year but also above average for the past five fiscal years, a good indicator of future potential and growth (Oracle Corporation, 2000c). The Gross Profit Margin measures a company’s profitability of sales after you deduct the cost of sales. This basically measures efficient management is in making decisions in reference to pricing and productions costs. Currently, Oracle’s gross profit margin is 71%, which is just under the current industry average of 76%. This could indicate that Oracle’s pricing policies or production methods are less efficient than the average industry company (Moyer, McGuigan, Kretlow 1998, 80).Another very important ratio to an analyst and an investor is the ROI or the Return on Investment ratio. This important statistic is figured out by simply taking the earning after taxes and dividing it by the total assets. The ROI will compare a company’s net income to its total asset investment. Oracle’s ROI is currently 131.71%, which is astounding when compared to the industry average of 4.59% and the S&P 500 average of 14.66%. The five-year average ROI for Oracle is 48.78%, the industry average is 25.18%, and the S&P 500 is 14.52% (Oracle Corporation, 2000d). This is a very positive indicator of someone’s potential return on his or her investment in Oracle Corporation. It basically says that people who invested this last fiscal year and the last five fiscal years have earned a profit on their original investment. This would definitely encourage a person to invest in Oracle Corporation (Moyer, McGuigan, Kretlow 1999, 81).The return on stockholders’ equity is another important statistic to look at for profitability. It is formulated by, again, taking the earnings after taxes, and dividing it by the stockholder’s e...
