Diageo & Alcohol Companies
Posted: December 8th, 2019, 12:18 pm
I calculate the return on capital employed and operating margin for my shareholdings to keep track of the trend over time and the absolute performance they achieve. I use the unadjusted earnings from their annual reports and calculate it manually. I wonder if I am doing it wrong for Diageo.
If we look at EBITDA margin data provided by Sharepad, it shows the margin in the 30s%. However, my manual calculations show a lower number and an average of 20.6% since 2000.
For 2018, for example, I have operating profit of 3691 / 18432 sales and so 20.02% operating margin.
However, I think the calculation other sources use for alcoholic drinks companies is operating profit of 3691 / 12163 (sales - excise duties) which gets us a 30.34% operating margin for the same year.
Should I be better advised to calculate the operating margin on the basis of revenues after excise duty has been deducted?
I guess the key is that I calculate the operating margin for alcoholic drinks companies the same way so that I can compare them (Diageo is the only one I hold currently). The reason I have always calculated manually the data for my shareholdings is that I take it directly from the financial statements in the annual reports so that I know I am comparing them all on a like for like basis.
Thoughts?
Best wishes
Mark.
If we look at EBITDA margin data provided by Sharepad, it shows the margin in the 30s%. However, my manual calculations show a lower number and an average of 20.6% since 2000.
For 2018, for example, I have operating profit of 3691 / 18432 sales and so 20.02% operating margin.
However, I think the calculation other sources use for alcoholic drinks companies is operating profit of 3691 / 12163 (sales - excise duties) which gets us a 30.34% operating margin for the same year.
Should I be better advised to calculate the operating margin on the basis of revenues after excise duty has been deducted?
I guess the key is that I calculate the operating margin for alcoholic drinks companies the same way so that I can compare them (Diageo is the only one I hold currently). The reason I have always calculated manually the data for my shareholdings is that I take it directly from the financial statements in the annual reports so that I know I am comparing them all on a like for like basis.
Thoughts?
Best wishes
Mark.