What is profitability ratios, Financial Accounting

Assignment Help:

Profitability Ratios - These ratios include the Gross profit Margin, Net profit Margin, Operating Margin, Return on Equity (ROE), and Return on Total Assets. These ratios helps the firm to analyze its profitability, the trend in profits and helps to take decisions regarding improving the profitability in the short and long term.

Ø  Gross profit Margin = Gross Profit / Total Revenue

Ø  Net profit Margin = Net Income / Total Revenue

Ø  Operating Margin = Operating Income / Total Revenue

Ø  Return on Equity (ROE) = Net Income applicable to Common Shares / Total Equity

Ø  Return on Total Assets (ROTA) = Earnings before Interest and Taxes (EBIT) / Total Assets

 


Related Discussions:- What is profitability ratios

What is auditors report explain, Q. What is Auditors report explain? Sp...

Q. What is Auditors report explain? Special Report - Special report is a term used for Auditors' reports issued in connection with various types of financial presentations, inc

Current yields for t-bonds, ACT presently is all-equity financed. This refl...

ACT presently is all-equity financed. This reflects the stance of the former CEO, a dominant personality who stated repeatedly: "I don't want us to be in thrall to the demands of t

Capital expenditure as a percentage of total asset, Analyze one completed M...

Analyze one completed M&A transaction from recent times There are two main requirements (1) an analysis of the strategic and economic rationale behind the merger, and (2) an analy

Finance, defination of finance accounting

defination of finance accounting

Operating lease, For a capital lease the lessee records the lease payments ...

For a capital lease the lessee records the lease payments as rent expense, but for an operating lease the lessee reports the lease payments as depreciation expense For an operating

List four limitations of ratio analysis, SECTION B QUESTION 2: Tw...

SECTION B QUESTION 2: Two companies Juk Ltd and Roop Ltd operate in the tourism sector. Financial forecasts are provided below: Income Statement for yea

Compute ratio, The comparative financial statement of new World Piano Compa...

The comparative financial statement of new World Piano Company for 2003,2002, and 2001 included the following selected data: 2003 2002 2003 In Millions Cash $67 $66 $62 Short T

Greek Debt Exchange, Greek Debt Exchange On the evening of February 20, 201...

Greek Debt Exchange On the evening of February 20, 2012 private institutional investors, representatives of the IMF, ECB, and European governments agreed to a major "intervention"

Calculate the net present value for an investment project, Calculate the ne...

Calculate the net present value for an investment project with the following cash flows using a 12 percent cost of capital:     Year                    0                      1

Determine the cost of equity, Lockheed Martin's management wishes to fi...

Lockheed Martin's management wishes to find out whether they have excess debt capacity. Its current market value of equity is $40 b and its book value of debt is $

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd