This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.These figures depict trends in the net profit margin and total asset turnover for Google and Yahoo. Financial ratios should also be interpreted relative to the industry averages. As indicated by MSN Money, the total asset turnover for the “Internet Information Provider” industry is .3. The average profit margins for the industry are 22.9%.
Net Profit Margin (NPM) is defined as Net Profit divided by Sales. A higher NPM increases the value for the firm’s shareholders because it indicates the bottom line profit per dollar in sales. Yahoo’s NPM has more than doubled from 2007 to 2011, moving from under 10% to over 20%. In contrast, while Google’s NPM increased impressively from 2008 to 2009, it has since leveled off, and even decreased slightly over the past year. Nevertheless, at 25%, Google’s NPM remains above the industry average of 23% as well as Yahoo’s current NPM of 21%....