OPERATING MARGIN
| Operating Margin | SOUTHERN COMPANY | CenterPoint Energy, Inc. | NextEra Energy, Inc | |
|
2013 |
19.05% |
46.57% |
20.09% |
|
|
2012 |
26.99% |
54.4 |
26.10% |
|
|
2011 |
23.96% |
50.30% |
15.28% |
|
|
2010 |
21.78% |
49.81% |
30.50% |
Operating margin ratio shows if the fixed costs are too much for the manufacturing or sales amount. High or escalating operating margin is preferred if the operating perimeter is increasing, the business is earning a lot more per dollar regarding sales. Operating margin can often compare a company having its competitors and having its past performance.
NET PROFIT MARGIN
| Net Profit Margin | SOUTHERN COMPANY | CenterPoint Energy, Inc. | NextEra Energy, Inc | |
|
2013 |
10% |
5.17% |
9.01% |
|
|
2012 |
15% |
6.27% |
12.71% |
|
|
2011 |
13% |
5.45% |
17.26% |
|
|
2010 |
12% |
4.57% |
7.71% |
A larger profit margin indicates an even more profitable company that features better control over its costs in comparison to its competitors. As the figures also suggest that Southern Company is more profitable as compared to their competitors. Nextra Energy Competes aggressively with Southern and that, Southern Company has been consistent to their profit margin during the past four years. In 2012, it is suggested that the profit margin was 15%.
RETURN ON SHAREHOLDER EQUITY
| Return on Shareholder Equity | SOUTHERN COMPANY | CenterPoint Energy, Inc. | NextEra Energy, Inc | |
|
2013 |
8.65% |
7.25% |
11.31% |
|
|
2012 |
12.71% |
9.74% |
12.27% |
|
|
2011 |
12.40% |
37.27% |
13.02% |
|
|
2010 |
12.06% |
15.00% |
14.29% |
The amount of net income returned as a percentage of shareholders equity. Return on collateral measures a firm's profitability by revealing just how much profit a company generates while using the money which the shareholders invested.
Southern Company return on equity decreased to 8.65% as compared to their past year performance, whereas, the competitors have good return on equity and in 2011 return on equity for CenterPoint was 37.25%.
DEBT TO TOTAL ASSETS
| Debt to Total Assets | SOUTHERN COMPANY | CenterPoint Energy, Inc. | NextEra Energy, Inc | |
|
2013 |
6.8000 |
1.93 |
0.35 | |
|
2012 |
6.9000 |
2.28 |
1.10 | |
|
2011 |
6.8000 |
2.18 |
1.25 | |
|
2010 |
7.7416 |
2.97 |
2.60 |
This ratio indicates the percentage financing of total assets over debt. Southern’s debt to asset ratio is consistent and high as compared to their competitors. Southern Company trusts on investing more to their debts because they are generating efficient profit from their debts as compared to their investment on Equity shares.
DEBT TO COMMON EQUITY
| Debt to Common Equity | SOUTHERN COMPANY | CenterPoint Energy, Inc. | NextEra Energy, Inc | |
|
2013 |
2.25 |
1.93 |
1.576 |
|
|
2012 |
2.30 |
2.277 |
1.537 |
|
|
2011 |
2.22 |
2.176 |
1.457 |
|
|
2010 |
2.23 |
2.965 |
1.44 |
Lower values of debt-to-equity relation are favorable which indicate less risk. Higher debt-to-equity relation is unfavorable as it means that the business enterprise relies more about external lenders thus, it is facing a great threat, especially at higher rates. A debt-to-equity ratio of just 1 means that 50 % of the assets of a business are financed by debts as well as half by the shareholders' equity. A value beyond 1.00 signifies that more assets are usually financed by debt and that those are financed by money regarding shareholders' investment and vice versa.
DU PONT ANALYSIS
Southern’s DuPont vertical analysis within the four year period of time indicates three points. Firstly, the improving profit margin signifies that Southern Company could generate much more income. Secondly, Southern’s asset turnover rate slightly increased within the five year period of time, indicating that Southern Company is improving its asset management. Lastly, Southern’s equity multiplier gradually decreased which indicates that Southern should lower its financial leverage, replying on equity as an alternative to debts to fund its assets.
Southern’s DuPont horizontal analysis within the four year time compares its DuPont along with CenterPoint Energy, Inc. and NextEra Energy Inc. DuPont needs to be considered in order to understand Southern’s effectiveness in the market. The benefit to Southern is that its growth-rate margin is actually faster than both CenterPoint Energy, Inc. and NextEra Energy, Inc. The end result indicates that Southern is much better at controlling cost when compared with CenterPoint Energy, Inc. and NextEra Energy, Inc. Secondly, Southern’s assets turnover is above CenterPoint Energy, Inc. and NextEra. Therefore, Southern is more effective with regard to using its assets to generate income. Lastly, Southern’s equity multiplier is larger than CenterPoint Energy, Inc. and more compact than NextEra. The outcome indicates that Southern has more leverage when compared with Google and less leverage when compared with Microsoft........................
This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.
Related Case Solutions & Analyses:
Loctite Corporation Industrial Products Group
Real Estate Management
The Value of Flexibility at Global Airlines
First Quantum Minerals vs. Eurasian Natural Resources
Business Leadership: The Case of TDC Sunrise
Château D’agel (B): Living The Dream
Lafarge’s C-O-Tool: Supporting CO2 Mitigation Decision-Making
Running A Profitable; Growing And Sustainable Business: Novo Nordisk (A)
Techam INC: Managing Partnerships And Climate Protection
Predicting Earnings Manipulation by Indian Firms Using Machine Learning Algorithms
