Profit Ratios

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Author:
Lamies10
ID:
116057
Filename:
Profit Ratios
Updated:
2011-11-11 07:56:50
Tags:
Profit Ratios
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Description:
Chp.15
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  1. Profit Margin
    • What percentage of sales made it to the bottom line?
    • Higher is better
  2. Gross Profit Margin
    • What percentage of sales is left for operating and other expenses?
    • Higher is better
  3. Operating Profit Margin
    • What percentage of sales is left after taking out COGS and operating expenses?
    • HIGHER is better
  4. Return on Assets
    • What return did we generate on our investment in assets?
    • HIGHER is better
  5. Sales to Fixed Assets
    • How effectively are we using our investment in fixed assets to generate sales?
    • HIGHER is better
  6. Return on Investment
    • How effectively are we using the investment into the firm to generate a profit.
    • HIGHER is better
  7. Return on Equity
    • Was the equity investment worth it? Did our shareholders earn a sufficient return on their equity investment?
    • HIGHER is better
  8. Earnings Per Share
    • How much profit did each share of stock earn this year?
    • HIGHER is better
  9. Price/Earnings Ratio
    • How much are stockholder’s paying for the earnings? What multiple of earnings are they willing to pay for the stock?
    • HIGHER is better

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