Harley Davidson Performance Analysis There are many ways to analyze a company's performance, some more popular than others. According to Barney's text, the accounting method is the most widespread way to measure the performance of a company (Barney, 2002). Some of the reasons for the popularity might include the fact that accounting measures of performance are publicly available for many companies and communicate a great deal of information about a company's operations. Other performance analysis methods include firm survival and the multistakeholder approach. The first method we will look at is the accounting method. Through this accounting approach we will analyze specific ratios and their possible impact on the company's performance. Specific ratios we will look at include return on total assets, return on equity, gross profit margin, earnings per share, price to earnings ratio, debt to assets, debt to equity, revenue customer accounts, total asset turnover, fixed asset turnover and average collection period. I will explain each ratio in more detail and why I included it in this analysis when I provide the results of each specific ratio calculation. Return on total assets (ROA) is an overall measure of profitability that measures management's total effectiveness in generating profits with its available assets. This ratio indicates the amount of net income generated by each dollar invested in assets. The higher the firm's return on total assets, the better. Harley Davidson's return on total assets was 14.04% for 2001, 14.27% for 2000. These percentages are high and show an upward trend, which demonstrates strong performance in this area over the last two years. Return on equity (ROE) measures profitability from the perspective of shareholders. ROE is a calculation of the return obtained from ordinary shareholders' investment in the company. In general, the higher the return, the better off the shareholders are. Harley Davidson's return on equity was 24.92% for 2001 and 24.74% for 2000. Over the past two years they have sustained consistent, positive returns for their shareholders. The next ratio we will look at is gross profit margin. Gross profit margin (GPM) measures the percentage of each sales dollar remaining after the company pays for its goods. The higher the gross profit margin, the better. Harley Davidson's gross profit margin was 35.08% for 2001, 34.09% for 2000. The fourth ratio we will analyze is earnings per share. Earnings per share (EPS) is the number of dollars earned during the period on behalf of each share of common stock outstanding.