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☆☆☆☆☆these are ratios which analyze profitability of a company. higher ratios imply higher profitability and value of a company.
there are many profitability ratios which are calculated. some of them are:
it is also known as net profit margin. this ratio shows how much net income a company earns from operations. a higher ratio implies higher profit earned. profit margin is calculated as follows:
operating margin shows the operating income earned by a company. higher margin implies higher revenue earned. operating margin is calculated using the following formula:
this profitability ratio shows how much income is contributed by assets of a company. generally, assets contribute a majority of income earned. ROA is calculated using the following formula:
this ratio shows how much income is generated by equity of the company. it is a great contributor towards profitability of a company. return on equity is calculated as follows:
total asset turnover shows how much revenue is contributed by assets of a company. a higher ratio implies higher revenue earned. it is calculated as follows:
