Profitability Ratios
Profitability ratios are a class of financial metrics that are used to assess a business’s ability to generate earnings relative to its associated expenses. For most of these ratios, having a higher value relative to a competitor’s ratio or relative to the same ratio from a previous period indicates that the company is doing well.
| S. No. | RATIOS | FORMULAS |
|---|---|---|
| 1 | Gross Profit Ratio | Gross Profit/Net Sales X 100 |
| 2 | Operating Cost Ratio | Operating Cost/Net Sales X 100 |
| 3 | Operating Profit ratio | Operating Profit/Net Sales X 100 |
| 4 | Net Profit Ratio | Operating Profit/Net Sales X 100 |
| 5 | Return on Investment Ratio | Net Profit After Interest And Taxes/ Shareholders Funds or Investments X 100 |
| 6 | Return on Capital Employed Ratio | Net Profit after Taxes/ Gross Capital Employed X 100 |
| 7 | Earnings Per Share Ratio | Net Profit After Tax & Preference Dividend /No of Equity Shares |
| 8 | Dividend Pay Out Ratio | Dividend Per Equity Share/Earning Per Equity Share X 100 |
| 9 | Earning Per Equity Share | Net Profit after Tax & Preference Dividend / No. of Equity Share |
| 10 | Dividend Yield Ratio | Dividend Per Share/ Market Value Per Share X 100 |
| 11 | Price Earnings Ratio | Market Price Per Share Equity Share/ Earning Per Share X 100 |
| 12 | Net Profit to Net Worth Ratio | Net Profit after Taxes / Shareholders Net Worth X 100 |
