Effects of Rover Sell Off on the Financial Performance of BMW Case Study

Effects of Rover Sell Off on the Financial Performance of BMW - Case Study Example This is amidst the rising gross profit margin (16.04 to 16.28) from 1998 to 199 indicating that the company is trying to make higher profit by charging a higher mark-up. Asset turnover have also significantly declined from 1997 to 1999 reflecting the company's inability to manage assets as efficient as the previous years. In 1999, a dollar of the company's asset yields only $0.91 in total sales compared to the $1.11 in 1997. In terms of leverage, the three year span under consideration also sees the increasing dependence on debt as a major source of financing. Total debt as a percentage of total assets is 40.92% in 1999 which is significantly higher than the 34.34% and 36.75% reported in 1997 and 1998, respectively. BMW appeared satisfactory in terms of liquidity as its current assets can more than pay-off its immediate obligations. It current ratios are 1.33 in 1999, 1.09 in 1998, and 1.27 in 1997. However, the ballooning of accounts receivable is evidenced by the increasing percent age of receivables to current assets which peaked to 57.36% in 1999. Three years after the sell-off of Rover, BMW seem to fail in improving its financial position except its profitability. In fact, its computed financial ratios indicate further deterioration in terms of leverage, asset utilization, and liquidity.