Finance and Budgeting

5. The Alpine Lodge has several profitability ratios for the 2014-2016 as follows: 2014 2015 2016 Profit margin 12% 13% 14% EBITDA margin ratio 18% 17% 16% Operating efficiency ratio 24% 23% 28% Return on assets 20% 19% 18% Return on owners’ equity 40% 42% 44% Note: EBITDA stands for earnings before interest, tax, depreciation and amortization. Based on the above profitability ratios, discuss (make sure to support your interpretation by referring to specific trends noticeable in the relevant ratios; explain why these ratios are relevant to your answer): 5.1 Management’s performance over the three-year period. 5.2 The profitability of the Alpine Lodge from 2014 to 2016.