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Profitability targets of a company can be established by financial ratios of return on ordinary shareholders' funds (ROSF) and return of capital employed (ROCE), which they express the relationship between the profit generated in a particular period and the owners' stake or the long-term capital invested in the company respectively, measuring the returns payable to suppliers, lenders as well as shareholders' dividends, which is said to be the fundamental measure of financial performance, and is calculated by the below formula: (Maguire & Wayte, 2007)

ROCE = Net profit (before interest and taxation)Capital employed x100

Capital employed = Total assets less liabilities + Shareholder's fund

Zara UK's ROCE for the year 2008 is:

ROCE= 478898262 x100 = 4.87 %

Companies tend to aim as high a value as possible in ROCE, provided that they do not take on anymore risk. (Maguire & Wayte, 2007)

In order to evaluate the operational performance of a company in past years, the most appropriate way is to measure the net profit margin ratio, which represents the percentage of net profit over the sale revenue during a certain period, is expressed as: (Maguire & Wayte, 2007)

Net profit margin

= Net profit (before interest and taxation)Sales revenuex100

For the year 2008, the net profit margin for Zara UK is:

Net profit margin = 4788237952 x100 = 2.01 %

There are vast number of factors will have a significant effect on the net profit margin including competitions in the market and the risk level of the company as well as the gross profit, which is representing the difference and relationship between sales revenue and the cost of goods sold. This ratio is a percentage expressing the profitability of goods selling and buying before any expenses take place, and is expressed as: (Maguire & Wayte, 2007)

Gross profit = Sales revenue - Cost of goods sold

Gross profit margin

= Gross profitSales revenue x100

For the year 2008, Zara UK's gross profit is:

Gross profit margin = 138738237952 x100 = 58.31 %

Verdict (2008) suggested that higher margins are established within the luxury brands having signature looks with less direct competitors on price. Before the UK recession, gross profit margins vary from 50% for mid-market retailers and 70% for premium market; it indicates that Zara UK is operating in the mid-market with reasonable gross profits. (Verdict, 2009) Market and investment analysts can only access a company's success after they have calculated and compare the above ratios in a few years of financial statements.

Liquidity of a business is vital as it indicates the ability of a company paying debts as well as the ability of its debtors to repay the company. It is very important for lenders and suppliers identifying the ability of a company to pay bills and for stakeholders including shareholders and employees knowing the company they are working for is going to stay operating or not. Generall本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。