Profitability Ratios, Profitability Ratios : These ratios comprise the Gross profit

Profitability Ratios

Profitability Ratios: These ratios comprise the Gross profit Margin, Net profit Margin, Operating Margin, Return on Equity (ROE), and Return on Total Assets. Such ratios help the firm to examine its profitability, the trend in profits and aid to take decisions regarding enhancing the profitability in short and long term.

• Gross profit Margin = Gross Profit / Total Revenue
• Net profit Margin = Net Income / Total Revenue
• Operating Margin = Operating Income / Total Revenue
• Return on Equity (ROE) = Net Income applicable to Common Shares / Total Equity
• Return on Total Assets (ROTA) = Earnings before Interest and Taxes (EBIT) / Total Assets

View Complete Question

Related Questions in Corporate Finance

Q : What is the Free Cash Flow Is the Free

Is the Free Cash Flow (FCF) the sum of the debt cash flow and the equity cash flow?

Q : Weighted return and simple return to

What is the difference between weighted return and simple return to shareholders?

Q : What is the expected risk premium on

You have decided to invest 30 percent in X; 30 percent in Y; and 40 percent in Z. Theprobability of the state of the economy is Boom 25%; Normal 60%; and, Bust 15%. The rateof return for stock X is Boom .20; Normal .15; and, Bust .00. The rate of return for stock Y is

Q : Problem on car rental plans Ape Car

Ape Car Rental plans to begin its business by buying 10 cars at the average price of $18,000 each, depreciating them entirely over 5 years utilizing the straight-line method. It will rent space in a parking lot for $300 a month, paying the rent in advance every month.

Q : Illustrates the Gordon and Shapiro

What is the importance and the utility of the given formula: Ke = DIV(1+g)/P + g?

Q : Bond Price Information What is Bond

What is Bond Price Information: Answer: Corporate bond market is not considered to be much transparent as it trades predominantly over the counter and investors do n

Q : What is the required rate of return on

Woidtke Manufacturing's stock currently sells for $29 a share. The stock just paid a dividend of $2.50 a share (i.e., D0 = $2.50), and the dividend is expected to grow forever at a constant rate of 9% a year. What st

Q : Problem on annual mortgage payment You

You just took out a variable-rate mortgage on your new home. The mortgage value is $100,000, the term is 30 years, and initially the interest rate is 8%. The interest rate is fixed for 5 years, after which the time rate will be adjusted according to the prevailing rat

Q : How can auditor spot acts of creative

How can auditor spot acts of creative accounting? Means let an illustration, the excess of provisions or the non-elimination of intra group transactions along with value added.

Q : Corporate Earnings Analysis exercise

Identify two comparable corporations. Explain why you think they are comparable to your corporation. Earnings analysis: Do an earnings analysis of your corporation. Calculate and plot.

Discover Q & A

Leading Solution Library

Avail More Than 1422571 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads

No hassle, Instant Access

Start Discovering

18,76,764

1924771
Asked

3,689

Active Tutors

1422571

Questions
Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment