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    Profitability Ratios: Gross Margin

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    Briand Dayday
    This document defines and provides examples of various profitability ratios that measure a company's ability to generate profits from its assets and control expenses. It lists ratios such as gross margin, operating margin, return on equity, return on assets, return on investment, and cash flow return on investment. The document also briefly mentions liquidity ratios which measure a company's ability to meet short-term debts and obligations.

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    Profitability Ratios: Gross Margin

    Uploaded by

    Briand Dayday
    20 views3 pages
    This document defines and provides examples of various profitability ratios that measure a company's ability to generate profits from its assets and control expenses. It lists ratios such as gross margin, operating margin, return on equity, return on assets, return on investment, and cash flow return on investment. The document also briefly mentions liquidity ratios which measure a company's ability to meet short-term debts and obligations.

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    Profitability Ratios

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    This document defines and provides examples of various profitability ratios that measure a company's ability to generate profits from its assets and control expenses. It lists ratios such as gross margin, operating margin, return on equity, return on assets, return on investment, and cash flow return on investment. The document also briefly mentions liquidity ratios which measure a company's ability to meet short-term debts and obligations.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    20 views3 pages

    Profitability Ratios: Gross Margin

    Uploaded by

    Briand Dayday
    This document defines and provides examples of various profitability ratios that measure a company's ability to generate profits from its assets and control expenses. It lists ratios such as gross margin, operating margin, return on equity, return on assets, return on investment, and cash flow return on investment. The document also briefly mentions liquidity ratios which measure a company's ability to meet short-term debts and obligations.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Profitability ratios

    Profitability ratios measure the company's use of its assets and control
    of its expenses to generate an acceptable rate of return
    Gross margin, Gross profit margin or Gross Profit Rate[7][8]

    OR

    Operating margin, Operating Income Margin, Operating profit
    margin or Return on sales (ROS)[8][9]

    Note: Operating income is the difference between operating revenues
    and operating expenses, but it is also sometimes used as a synonym
    for EBIT and operating profit.[10] This is true if the firm has no non-
    operating income. (Earnings before interest and taxes / Sales[11][12])
    Profit margin, net margin or net profit margin[13]

    Return on equity (ROE)[13]

    Return on investment (ROI ratio or Du Pont Ratio)[6]

    Return on assets (ROA)[14]

    Return on assets Du Pont (ROA Du Pont)[15]

    Return on Equity Du Pont (ROE Du Pont)

    Return on net assets (RONA)

    Return on capital (ROC)

    Risk adjusted return on capital (RAROC)

    OR

    Return on capital employed (ROCE)

    Note: this is somewhat similar to (ROI), which calculates Net Income
    per Owner's Equity
    Cash flow return on investment (CFROI)

    Efficiency ratio

    Net gearing

    Basic Earnings Power Ratio[16]

    [edit]
    Liquidity ratios
    Liquidity ratios measure the availability of cash to pay debt.
    Current ratio (Working Capital Ratio)[17]

    Acid-test ratio (Quick ratio)[17]

    Cash ratio[17]

    Operation cash flow ratio

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