what are profitability ratios?
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Answer Posted / amandeep kaur
I measures profitability of the company. it is calculated by relating profits to sales, investment or shares.
TYPES:-
1) ROI(Return on investment):- EAT/TOTAL ASSETS.
2) ROE(Return on equity) :- EAT/OWNERS EQUITY.
3) Gross profit ratio :- Gross profit/sales * 100
4) Net profit ratio :- EAT/sales * 100
5) Operating profit ratio :- EBIT/sales * 100
(EAT- Earnings after tax, EBIT- Earnings before interest and tax.)
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