Profitability Ratios

Question 1

Return on total assets: Broad

Answer 1

(Operation profit + Investment income) / (Avg total assets)

Question 2

Return total assets: narrow

Answer 2

Operating profit / ( Avg total assets - avg financial assets)

Question 3

Return on equity

Answer 3

(Operations prof + invest income - finance costs) / ( Avg equity )

Question 4

Return on shareholders equity

Answer 4

(Op equity + invest income - finance costs - (non-controlling int / 1-t ))

/ (avg shareholders equity)

Question 5

Return on fin assets

Answer 5

Invest income / Avg financial assets

X 100

Question 6

Cost of debt

Answer 6

Finance cost

/ avg debt capital

X 100

Question 7

Gross profit margin

Answer 7

Gross profit / revenue

X 100

Question 8

Markup

Answer 8

Gross Profit / COS

X100

Question 9

Operating profit margin

Answer 9

Operating profit
/ revenue

X100

Question 10

Enterprise profit margin

Answer 10

Operating profit + investment income
/ revenue

X100

Question 11

EBIT Margin

Answer 11

PBT + Finance cost
/ Revenue

X100

Question 12

Net profit margin

Answer 12

PAT
/ Revenue

X100

Question 13

Total asset turnover

Answer 13

Net revenue
/ Avg total assets

Question 14

PPE turnover

Answer 14

Net revenue
/ Avg PPE @ cv

Question 15

Current asset turnover

Answer 15

Net revenue
/ Avg current assets

Question 16

Inventory turnover

Answer 16

COS
/ Avg inventory

Question 17

Trade receivables turnover

Answer 17

Credit revenue
/ avg trade receivables

Question 18

Cash turnover

Answer 18

Net revenue
/ Avg cash and cash equivalents