Budget: Decomposing return on equities' drivers

The company`s Net operating profit margin(NOPM) that measures the efficiency of profitability retreated from 20.81 to 17.77 percent in the last TTM, mainly due to the drop in net operating profit after tax(NOPAT) with regard to the versus period. Thus, for each riyal of sales the company earns about 0.18 riyal after all operating expenses and tax.
On the other side, Net operating assets turnover (NOAT) which measures the efficiency of productivity of the company`s net operating assets, increased slightly from 69.30 to 71.24 percent by the end of June 2017 and that can be attributed to the decrease in net operating assets(NOA) was higher than reduction in revenues. This result means that, for each riyal of net operating assets, the company yields about 0.71 riyal of sales.
The amount of cash that Budget company generates by the end of June 2017, and after accounting for all capital expenditures increased to 193,71  million riyals as compared to 117,98 million riyals during the same period of the previous year.



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