FA- profitability Ratios

Question 1

Gross profit %/ margin

Answer 1

Gross profit? sales x 100/1

Question 2

Net profit percentage

Answer 2

Profit before finance charges and tax/ Sales x 100/ 1

Question 3

Return on capital employed

Answer 3

Profit before finance charges and tax /Average capital employed x 100/1

Question 4

Return on owner’s equity

Answer 4

Profit after and preference dividends/ Average ordinary shareholders x 100/1

Question 5

Return on assets

Answer 5

Profit before finance charges and tax/ Average total assets x 100/1

Question 6

earnings per ordinary share

Answer 6

Profit after tax less preference dividends/ Number of ordinary shares x 100/1

Question 7

Dividends per share

Answer 7

Ordinary (or preference) dividends/ Number of ordinary (or preference) shares x 100/1

Question 8

Ordinary dividend payout ratio

Answer 8

Dividends per share/ Earnings per share or dividends/ earnings

Question 9

Price earnings ratio

Answer 9

Market price per share/ Earnings per share

Question 10

earnings yield

Answer 10

Earnings per share/ Market price per share x 100/1

Question 11

Dividend yield

Answer 11

Dividends per share/ Market price per share x 100/1