Key ratios: Earnings structure analysis

Question 1

Name key ratios: Earnings structure analysis (cost of sales method)

Answer 1

Production cost ratio: cost of sales / revenues

Selling and distribution cost ratio: Selling and distribution expenses / revenues

Administrative cost ratio: administrative expenses / revenues

Question 2

Production cost ratio

Answer 2

Production cost ratio: cost of sales / revenues

• Share of manufacturing costs in revenues

Question 3

Selling and distribution cost ratio

Answer 3

Selling and distribution cost ratio: selling and distribution expenses / revenues

• Measure of the importance of selling and distribution in generating sales

Question 4

Administrative cost ratio

Answer 4

Administrative cost ratio: administrative expenses / revenues

• Measure of the importance of general administrative in generating sales