Amazing Profitability Ratios Types
I Gross Profit Ratio.
Profitability ratios types. Return on Capital Employed. Gross profit ratio frac Gross profitNet sales x 100 frac 185000575000 x 100 322. Operating Profit Ratio Operating ProfitNet Sales 100.
Gross Profit Ratio establishes the relationship between gross profit and Revenue from Operations i. Profitability ratios are calculated in order to measure the overall efficiency of a firm. Ability to create different kinds of returns for shareholders Cash flow ratios ie.
Net profit ratio Net profit ratio is the link between sales and net profit. Gross Profit Margin Gross profit margin is typically the first profitability ratio calculated by businesses. It is also called Turnover Ratio.
Ability to convert revenue into cash or create a surplus Its wise to keep a close eye on profit ratios by including them in monthly management accounts. Ability to generate types of profit as a proportion of revenue Return ratios ie. Net Profit Margin is one of the Profitability Ratios that use to measure and assess the proportion of an entitys net profit after reducing the operating expenses.
This is the ratio of Gross Profit to Net Sales and expressed as a percentage. Net Profit Ratio Net ProfitNet Sales 100 Net Sales 900000 Net Profit Gross Profit Indirect Income Indirect Expenses Net Profit 450000 30000 120000 Net Profit 360000 Net Profit Ratio 360000900000 100 Net Profit Ratio 40. Ii Net Profit Ratio.
Margin ratios ie. A General Profitability Ratios. Profitability Ratios are of five types.