Nopat Margin

ii. NOPAT Margin

The ratio of net operating profit after taxes (NOPAT) to sales measures the profitability of sales in operating perspective. Since management have the most ability in control over operating expenses against the operating profit, this ratio directly reflect their effeciency. For last five years, two companies have similar fluctuation in NOPAT margin. However, the margin level of FGL is higher than CCL which means FGL management is more efficient in controlling their operating expenses.

iii. Asset Turnover

The asset turnover is computed as sales divided by total assets which measure the profitability of two companies' assets. A higher percentage suggests that the company is producing large sales volume in relation to its assets. CCL's asset turnover has wavered around or above the 80%. The peak in 2007 is mainly due to the disposal of its South Korean business which reduced 14% in value of investments in bottlers' agreements. However, for the last five years, CCL has stayed a high level of assets turnover which FGL are not able to reach. Undeniably, this fact suggests that FGL is not using its assets as efficiently as CCL is.

Based on above analysis, two companies have similar trend on NOPAT margin and asset turnover, but CCL's ROE ratios trend to be more volatile than FGL's. Based on the ROE equation, we believe that CCL's leverage structure is more unstable than FGL's. We will analyse its capital structure in the next ratio section.

iv. Interest Coverage Rationn