Profitability Ratios Flashcards
How is gross profit margin calculated?
Gross Profit/Revenue x 100
How is gross profit calculated?
Revenue - cost of sales
How is operating profit margin calculated?
Operating profit/Revenue x 100
How is operating profit calculated?
Revenue - COS - other operating expenses OR
profit before interest and tax (PBIT)
How is profit before tax margin calculated?
PBT/revenue x 100
How is profit before tax calculated?
Operating profit +/- net interest
How is net profit margin/return on sales calculated?
net profit/revenue x 100
How is net profit calculated?
PBT - corporate income tax
How is ROCE or return on investment calculated?
Operating profit/total assets-current liabilities
How is return on equity calculated?
Profit after tax/equity x 100
How is return on assets calculated?
Operating profit/total assets x 100
