http://news.smh.com.au/breaking-news-business/norfolk-posts-30-profit-rise-20091125-jpbv.html
Summary:
The building service company, Norfolk Group Ltd has reported on Wednesday that it has a thirty percent rise in half year profit. The reason for such a huge improvement is because of the growth of the revenue during the past six months. The revenue went up from 3.76 billion to 3.88 billion, so the profits before interest and tax rise from 1.04 billion to 1.14 billion which is ten percent growth. In addition, the net debt fell by 24.2 percent. With the increase in revenue and decrease in liabilities, the company said they would be expecting to complete the refinancing the facility by the end of the financial year which is the end of March 2010.
Connection:
This article is pointing out how good the company is doing. Some of the investors will read the financial reports or articles like this to invest into the company. However, to calculate the profitability ratios which mentions in chapter two is one of the best ways to find out is this company worthwhile to invest in. Returning rate can calculate by net income divided by total revenues. For a normal company the returning rate should be around 10 percent, which some company may go a bit higher. Also we are only looking at the returning rate, but also the return on assets rate because the profit that a company make is generated by its assets.
Personal Reflection:
From the two rates I mentioned above, Norfolk Group Ltd. has pretty good figures. For its net revenue is 3.88 billion and its net income is 0.56 billion, so its returning rate is about 14% which is consider as a very good returning rate. Besides, its average total assets is 2.64 billion, so its return on assets rate is 21% which is consider as good too. Not only the profitability of this company is good, but since it has a huge decrease in its debt, so I think this company is definitely worthwhile to invest. One other thing that I like about this company is that the returning rate is good, but not too good like 30 or 40 %, so it will not involve with too much risk in the investment.
