Profitability ratios Flashcards
1
Q
Profitability ratios
A
Measures of a firm’s ability to generate profits as a percentage of sales generated
- four levels of profitability ratios resulting from the income statements:
- gross, operating, pre-tax, net income
2
Q
Gross margin
A
Gross profit / sales
3
Q
Operating margin
A
Operating income / sales
4
Q
EBIT margin
A
EBIT / Sales
5
Q
Net profit margin
A
Net income / Sales
