Calculation of profitability ratios, Financial Accounting

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Calculation of Profitability ratios  -

     
         
   

2008

2009

2010

G

Net Sales

8506616

11993699

16064038

H

Gross Profit

2145345

2940480

3782294

I

Net Profit

327743

450086

627643

J

EBIT or Operating Profit (Net)

660135

935835

1182927

K

Equity

1277659

1690493

2257267

L

Total Assets

3103645

4049092

5131809

         
         
 

Net Profit Margin ( I / G)

3.85%

3.75%

3.91%

         
 

Gross Profit Margin (H / G)

25.22%

24.52%

23.55%

         
 

Return on Equity (I / K)

25.65%

26.62%

27.81%

         
 

Return on Total Assets (J / L)

21.27%

23.11%

23.05%

As shown by above, out of the four ratios except Gross Profit Margin all other ratios have improved in 2010 as compared to 2008. However, both the Net margin and the Gross margin have declined in 2009 as compared to 2010. The company has shown better performance in terms of return on equity as well as return on total assets in both the years i.e. 2009 and 2010 as compared to 2008.

Overall, it can be said that 2010 has been a good year for the company in terms of profitability and overall the company has been moderately profitable with marginal increase in profit percentages.

 


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