The company also had a strong net profit-to-sales ratio
Hitachi surged 22 yen or 5.5 percent to 425 yen on optimism for its cost-cutting measures following a report the company plans to raise its operating profit-to-sales ratio
to above 10 percent.
Mitsukoshi also hopes to cut its debt by 36 billion yen (US$258.8 million) to 100 billion yen, boost its operating profit-to-sales ratio
to 2.5 per cent from the 0.56 per cent in fiscal 1997, and increase operating profits.
Manufacturing profits were expected to recover more strongly than non-manufacturing, with the current profit-to-sales ratio
stabilising at around 2.8 for FY 1993 as a whole (compared with a peak of 5.8 in 1989).
Through the merger, Yamanouchi and Fujisawa aim to achieve a ''midterm goal'' of more than 1 trillion yen in annual pharmaceutical sales with an operating profit-to-sales ratio
of around 25%.
Under the plan, the company aims for annual sales of 100 billion yen, an operating profit-to-sales ratio
of more than 30% and an average annual growth rate of 15% in operating profit by the final year.
Simple cost-to-sales and profit-to-sales ratios
can be misleading because implicit in such ratios is the assumption of a constant returns to scale production function.