Chapter 40, Profitability ratios Flashcards
1
Q
Gross Profit Margin
A
level of profit as a percentage of the sales turnover
gross profit/sales x 100
2
Q
Net profit Margin
A
takes it account direct and indirect costs net profit (operating profit) / sales x 100
3
Q
Return on Capital Employed
A
measures the net profit as a percentage of the capital employed
Operating profit/capital employed x 100
4
Q
Return on equity
A
measures ability of a business to generate profits from its shareholders investment into the business
