Economic profit for Delta SBD

Delta SBD has had negative economic profit for the last three years and then a positive economic profit in 2013. The primary reason for the general negative trend is due to the difference between return on net operating assets and the cost of capital. For the past three years, the company had net operating asset ratios of 7.20%, 7.23% and-132.57%, which is well under the consistent cost of capital of 10%. Hence the past three years of economic profit are negative, and that is why 2013 made economic profit. Another important thing to not is the economic profit is low in 2014. This low economic profit is seen throughout the: return on equity, return on net operating assets and the profit margin, and the reason for it is the mining boom that took place at the start of 2014.