22-Analysis of Profitability
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Introduction of Credit Management for Overseas Trade

36 Things You Need to Know About Credit Management for Overseas Trade

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22. Analysis of Profitability

The main Profitability Ratio commonly used overseas has the following indicators.

●Return on Sales

●Return on Assets, ROA

●Return on Equity, ROE

 

Return on Sales

The most common indicator to determine the profitability of Western companies. Return here means the dividend source for investors and it is Net Profit after Taxes. More than 5% becomes a standard.

 

<Calculation formula>

Net Profit / Sales = Return on Sales (%)

 

Return on Assets、ROA

It is an indicator that shows how effectively a company's assets are being used to make profits. The higher the ratio, the better the soundness and profitability of the company. In the West, 10% or more is considered as a standard for high profit.

 

<Calculation formula>

Net Profit / Assets = Return on Assets (%)

 

Return on Equity, ROE

It is an indicator that shows how effectively shareholders' and investors' capital is being used to make a profit. In particular, it is an indicator that is emphasized in the stock market.

The higher the ratio, the better the soundness and profitability of the company. In the West, 20% or more is considered as a standard of an excellent company.

 

<Calculation formula>

Net Profit / Net Worth = Return on Equity (%)

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【PDF】Introduction of Credit Management for Overseas Trade

Introduction of Credit Management for Overseas Trade

36 Things You Need to Know About Credit Management for Overseas Trade

This ebook was created as a resource for those who have trouble with diverse trading or want to learn Credit Management in a rational.

 

Chapter (Excerpt)

  • Major Differences Between International and Domestic Transactions 
  • Trade Reference
  • Bank Reference
  • Collection Agency
  • Reasons Behind Difficulty in Recovering Delayed Debts
  • Mistakes in International Transactions Where Japanese Companies are Prone to Fail
  • Customer Analysis ~ 5 C's of Credit
  • Dangerous Signs
  • Five Principles of Debt Collection