Profitability Ratios Flashcards
1
Q
Gross Profit Margin
A
(Gross profit/revenue) x100
A gp margin of 40% suggests that 40p of every £1 of revenue is gross profit
2
Q
Gross profit mark up
A
(Gross profit/cost of sales) x100
A gp mark up of 30% suggests that 30p is added to every £1 of cost of sales to get the selling price
3
Q
Profit to revenue
A
Profit for year (operations) / revenue X 100
4
Q
Overheads to revenue
A
Overheads / revenue X 100
5
Q
Return on capital employed
A
Profit from operations / capital employed X 100
Capital Employed = Total Equity + NCL
