Financial Ratios


Profitability Indicator Ratios

Gross Profit Margin GrossProfitRevenue\dfrac{Gross Profit}{Revenue} - You can think of it as the amount of money from product sales left over after all of the direct costs associated with manufacturing the product have been paid.
Operating Profit Margin OperatingIncomeRevenue\dfrac{Operating Income}{Revenue} - If companies can make enough money from their operations to support the business, the company is usually considered more stable.
Pretax Profit Margin IncomeBeforeTaxRevenue\dfrac{Income Before Tax}{Revenue} - Profit is the main goal of for-profit organizations. The goal is to make a profit through growth and to grow every year. As a result, one of the most important roles of the financial and investment analyst is to track and forecast profitability.
Net Profit Margin NetIncomeRevenue\dfrac{Net Income}{Revenue} - Generally, a net profit margin in excess of 10% is considered excellent, though it depends on the industry and the structure of the business.
Effective Tax Rate ProvisionForIncomeTaxesIncomeBeforeTax\dfrac{Provision For Income Taxes}{Income Before Tax} - If there’s one takeaway, it should be that a company’s tax situation is all but a living, breathing organism in its own right.
Return On Assets NetIncomeAverageTotalAssets\dfrac{Net Income}{Average Total Assets} - ROA Return on assets gives an indication of the capital intensity of the company, which will depend on the industry; companies that require large initial investments will generally have lower return on assets. ROAs over 5% are generally considered good.
Return On Equity NetIncomeAverageTotalEquity\dfrac{Net Income}{Average Total Equity} - ROE this ratio calculates how much money is made based on the investors' investment in the company.investors want to see a high return on equity ratio because this indicates that the company is using its investors' funds effectively.
Return On Capital Employed EBITAverageTotalAssetAverageCurrentLiabilities\dfrac{EBIT}{Average Total Asset − Average Current Liabilities} - ROCE shows investors how many dollars in profits each dollar of capital employed generates.
NIperEBT NetIncomeEBT\dfrac{Net Income}{EBT} - NIperEBT.
EBITperRevenue EBITRevenue\dfrac{EBIT}{Revenue} - EBITperRevenue.