2010 Volume 61 Issue 2 Pages 65-75
Many corporate managers pay distinct attention to the management indices based on how the profit and loss (P/L) statement is to be improved. However, in a survey of 1,620 listed companies, although the averaged recurring profit margin is improved, the averaged asset efficiency becomes worse. In the case of restaurant chains, both the recurring profit margin and asset efficiency of 83 listed companies became worse on average. This study proposes a method of creating a budget to improve the ordinary profit rate of the sales amount and asset efficiency in the management of a restaurant chain. This method establishes both the corporate goal for the return on assets (ROA), and targets such as the total asset return on equity (ROE) bounds and ordinary profit rate of the sales amount based on the ROA. It also, enables targets for the P/L statements and balance sheet (B/S) to achieve these goals. Next, the investment criterion to achieve the target P/L statements and B/S is proposed. This method is validated through a case-study of a restaurant chain. Investment in the opening of new stores and renovation of existing stores is evaluated.
