Operating Return on Assets - Revenue Essay Example

Operating return on assets (OROA) ratio is measure of the return earn by a firm operations divided by total assets. The operating return on assets indicates how much will return earned by a firm operation for every RM1 of the total assets. Public Bank Berhad generated RM0.0196 of operating profit for every RM1 of its invested assets in year 2007. That’s better than the RHB Bank Berhad, which generated an average RM0.0189 for every RM1 of their assets. Public Bank Berhad has operating return on assets (OROA) is higher than the average for the RHB Bank Berhad. This is because managers of Public Bank Berhad have done a good job of controlling costs and generating sales. This means that Public Bank earned more net operating per ringgit of investment in assets than the RHB Bank. In year 2008, Public Bank Berhad generated RM0.0201 of the operating profits for every RM1 of its invested assets. That’s worse than the RHB Bank Berhad, which generated an average RM0.0209 for every RM1 of their assets. Public Bank Berhad has operating return on assets (OROA) is lowest than the average for the RHB Bank. Public Bank Berhad’s managers have done not good job of controlling costs and generating sales compared to RHB Bank Berhad.

This means that Public Bank earned less of the net operating income per ringgit of investment in assets than the RHB Bank Berhad. In year 2009, once again Public Bank Berhad generated less of OROA compared to RHB Bank Berhad. Public Bank generated RM0.0184 of the operating profits for every RM1 of its invested assets. That’s worse than the RHB Bank Berhad, which generated an average RM0.0193 for every RM1 of their assets. Public Bank Berhad’s managers have done not good job of controlling costs and generating sales compared to RHB Bank Berhad. This means that Public Bank earned less of the net operating income per ringgit of investment in assets than the RHB Bank Berhad. Public Bank Berhad generated RM0.0208 of operating profit for every RM1 of its invested assets in year 2010. That’s better than the RHB Bank Berhad, which generated an average RM0.0198 for every RM1 of their assets. Public Bank Berhad has operating return on assets (OROA) is higher than the average for the RHB Bank Berhad. This is because managers of Public Bank Berhad have done a good job of controlling costs and generating sales. This means that Public Bank earned more net operating per ringgit of investment in assets than the RHB Bank.

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Public Bank continues to make higher the OROA in year 2011. Public Bank Berhad generated RM0.0208 of operating profit for every RM1 of its invested assets. That’s better than the RHB Bank Berhad, which generated an average RM0.0170 for every RM1 of their assets. Public Bank Berhad has operating return on assets (OROA) is higher than the average for the RHB Bank Berhad. This is because managers of Public Bank Berhad have done a good job of controlling costs and generating sales. This means that Public Bank earned more net operating per ringgit of investment in assets than the RHB Bank.

NET PROFIT MARGIN
Year| 2007| 2008| 2009| 2010| 2011|
Public Bank Berhad| 53.47%| 54.65%| 63.04%| 61.96%| 58.07%| RHB Bank Berhad| 5.98%| 5.1%| 6.6%| 8.32%| 10.06%|

Net profit margin is a key financial indicator used to assess the profitability of a company. Net profit margin measures how much of each ringgit earned by the company is translated into profits. A ratio of profitability calculated as net income divided by sales revenue or operating revenue. Thus in year 2007, for every ringgit of Public Bank Berhad keeps RM0.534 in profit after paying all the firm’s expenses, whereas the RHB Bank Berhad earns RM0.059.In year 2008, Public Bank keeps RM 0.546 for every ringgit of sale, whereas the RHB Bank Berhad earn RM0.051. For year 2009, Public Bank Berhad again has higher profit margin that is RM0.630 compared to the RHB Bank Berhad which is only earns RM0.066. In year 2010 for every ringgit of sales, the Public Bank keeps RM0.619 in profits after paying all the firm’s expenses, whereas the RHB Bank Berhad only earns RM0.083. Lastly in year 2011 the Public Bank still has higher of net profits margin compared the RHB Bank Berhad whereas Public Bank Berhad earns RM0.580 and RHB Bank Berhad earn RM0.010. Clearly, Public Bank Berhad has higher net income per ringgit of sales revenue than the RHB Bank Berhad for both of year. Therefore Public Bank is better than the RHB Bank Berhad from year 2007 until 2011.

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