Key ratios - profitability

Turkey 09 April 2017

BabaJide Martins F.

Profitability is the measure of profit against sales, assets, capital or other figures.

Saint Lucia 09 April 2017

Hermina S.

Is it correct to define probability as - the return of profit on capital investment?

South Africa 09 April 2017

Morne V.

Is it correct to define probability as - the return of profit on capital investment

Nigeria 09 April 2017

Sunday O.

balancing the ration and profitability

Uganda 09 April 2017

Bogere Stephen W.

Is it possible to use only Alison certificates to join another level of education?or Is it accredited to the international council of education?

Uganda 09 April 2017

Odongo M.

Accounting -> Key ratios - profitability Key ratios - profitability The key ratios used in the previous course are repeated here. Several ratios have been added and are indicated by an asterisk. Profitability is the measure of profit against sales, assets, capital or other figures. Ratio Formula Explanation Profitability 1. Return on assets *Return on owner's investment (ROI) Net profit/average owners equity This ratio shows the return to the owner on funds invested in the business. Allowing for the extent of funds borrowed this ratio may differ from return on assets. Return on assets (ROA) Net profit/average total asset NP/TA This ratio reflects the return on the total assets used in the business. The average of total assets at the beginning of the period and at the end is used in case there is a significant change in assets. 2. Return on sales Gross profit ratio Gross profit/sales Reflects the difference between the selling price of the stock and the cost price. This may be described as the mark up on stock. Net profit ratio Net profit/sales Measures net profit against sales. It reflects total revenue against all costs and expenses incurred by the business. When used in conjunction with the Gross profit ratio a business is able to discern whether the new situation is due to change in trading or operating. *3. Expense ratios An example is 'selling expenses to sales'. The business may seek to measure other major classifications of expenses against sales. These ratios are particularly useful when engaged in trend analysis. The responsiveness of an expense category such as selling expenses to sales indicates the effectiveness in the use of those expenses to generate revenue for the business. 4. Asset turnover Sales/average assets Displays the revenue generated by assets. It shows how well the business is using its assets. The carrying of excess stock, debtors or bank will be reflected by a decline in the ratio.

Ghana 08 April 2017

Nana Amankwah K.

Profitability is the measure of profit against sales, assets, capital or other figures.

Nepal 08 April 2017

Manish K.

All accepted ratios provide information about financial health of an organization. it provides up to date information about net profit ratio, expenses ratio, assets turn over, etc.