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Essay / Research Paper Abstract
This 11 page paper is based on a case study supplied by the student. The first part is an assessment of Brown Forman's financial performance in 1977 and 1978. The second part considers if the company should purchase the Southern Comfort Corporation for between 20 and 100 million. The bibliography cites 8 sources.
Page Count:
11 pages (~225 words per page)
File: TS14_TEbrownsc.rtf
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Unformatted sample text from the term paper:
and the horizontal performance of the company internally and against its competitors. If we are going to examine the performance of Brown Forman we need to start of with
the profit levels. The first profit ratio is the gross profit. The gross margin is expressed as a percentage. This is the level of revenue that remains when all of
the direct costs for producing the goods or services are deducted form the revenue. This indicates the level at which direct costs account take up revenue. The calculation is shown
below 1977 1978 Net sales 396176 457071 Cost of sales 274733 310539 Gross profit 121443 146532 Gross profit margin 30.6538 32.05891 Here we see the gross profit for 1977
was 30.65%, but this has increased in 1978 to 32.05%. This indicates that there has been an ability to reduces the cost of sales. The next profit measure can use
is the net profit. This net profit is a common ratio which is used by many stakeholders and is a primary efficiency
ratio. This measure of net profit and is expressed as a percentage of the profit compared to the turnover. The basic calculation is the net profit the total revenue
after all costs have been deducted, sometimes before interest and tax divided but mostly after tax and interest by the turnover, we will use the after tax figure (Elliott and
Elliott, 1998). It is often used as a benchmark by which the company can be compared with other companies. The level of the margin will depend on a range of
factors, such as pricing policy and industry. Whilst the figure is interesting the understanding of a companys position needs to be considered in a greater context, such as the way
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