Unit 4 Acc Chapter 18 Profitability Glossary/Equations Flashcards
1
Q
Return on Investment
A
Net Profit/Average Capital x100
Average capital is cap at start + cap at end/2
2
Q
Debt ratio
A
Total liabilities/Total assets x100
3
Q
Return on Assets
A
Net Profit/Average Total Assets x100
4
Q
Net Profit Margin
A
Net Profit/Sales Revenue x100
5
Q
Gross Profit Margin
A
Gross Profit/Sales Revenue x100
6
Q
Asset Turnover
A
Sales/Total Average Assets x100
7
Q
Profitability
A
- ability of business to earn profit
- measured by comparing its profit against a base (e.g: sales, assets, owner’s equity
