Profitability Ratios Flashcards
1
Q
Net profit margin
A
= net income / net sales
2
Q
return on total assets
A
= net income / average total assets
3
Q
return on assets (alternate)
A
= net profit margin * total asset turnover
4
Q
return on investment
A
= (net income + interest expense (1-tax rate)) / average (LT liabilities + equity)
5
Q
return on common equity
A
= (net income - preferred dividends) / average common equity
6
Q
net operating margin percentage
A
= net operating income / net sales
7
Q
Gross profit percentage
A
= gross profit / net sales
8
Q
operating cash flow per share
A
= operating cash flow / common shares outstanding
