profitability ratios (2) Flashcards
1
Q
what is always a profitability ratio?
A
the net profit margin
2
Q
how do you calculate the net profit margin?
A
net profit margin = net profit / sales revenue x100
3
Q
what are the two items needed to calculate the net profit margin?
A
sales revenue and net profit
4
Q
what will enable an enterprise to calculate its net profit?
A
The values for gross profit minus total expenses
5
Q
what happens if the net profit margin falls? (2)
A
the enterprise may take steps to reduce its expenses or increase its sales revenue
