profitability measures Flashcards
1
Q
gross profit margin
A
which percentage per euro sold is earned on gross profit - gross profit/ sales
2
Q
operating profit margin
A
which percentage per euro sold is earned on profit margin - operating profit/ sales
3
Q
net profit margin
A
which percentage per euro sold is earned on net profit - net profit/ sales
4
Q
rate of return on sales
A
relationship between net income and sales - net income/sales
5
Q
rate of return on total assets
A
measures a company’s success in using assets to earn a profit - (net income + interest expense) / average total assets
6
Q
rate of return on shareholders equity (ROE)
A
the amount of net income generated per euro invested in the company - (net income - preference dividend)/ (average of total equity - preference equity)
