Profitability ratios
Net profit margin – This ratio shows how well a company manages its operating expenses
such as administrative costs and interests on debt. The higher the ratio, the lower the operating
expenses of the company (Khan & Jain 2007). The analyses show that Ooredoo’s ratios for 2013
and 2014 were 9.728% and 7.614% respectively, which shows a decline caused by a decrease in
the net profit. On the other hand, Vodafone’s ratios are both negative as the company made
losses in both years (See the excel file). Even though Ooredoo’s ratio is not high enough, its cost
management practices are stronger than Vodafone’s (Qatar Stock Exchange, 2014).
Operating profit margin– the ratio shows the level of a company’s profitability after
meeting the operational and costs related to sales. It also shows the capability of a company to
service the cost of capital and pay taxes (Khan & Jain 2007). Based on the analyses, Ooredoo’s
ratios for 2013 and 2014 were 11.51% and 9.276% respectively, which is a decrease caused by a
decline in the level of sales. On the other hand, Vodafone’s ratios are both negative (-14.89%
and -8.633%) in 2013 and 2014 respectively. Vodafone’s ability to meet thecost of capital ant tax
is zero. Therefore, Ooredoo shows a stronger performance in terms of cost control, whereas,