Relationship Between Operating Profit Margin and Asset Turnover of Indian Manufacturing Companies of India: An analysis of the relationship between operating profit margin and asset turnover in Indian manufacturing companies

Abstract

This paper is based on the relationshipbetween operating profit margin and asset turnover of Indian manufacturingcompanies of India. Operating profit is also known as EBIT and isfound on the company's income statement. EBIT is earnings before interest andtaxes. The operating profit margin looks at EBIT as a percentage of sales. Theoperating profit margin ratio is a measure of overall operating efficiency,incorporating all of the expenses of ordinary, daily business activity. Asset management (turnover) ratios comparethe assets of a company to its sales revenue. Asset management ratiosindicate how successfully a company is utilizing its assets to generaterevenues. Analysis of asset management ratios tells how efficiently andeffectively a company is using its assets in the generation of revenues. Theyindicate the ability of a company to translate its assets into the sales.