Located at:
38 Fraley Street
Kane, PA 16735
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Fax (814) 837-2267
Phone( (814) 837-9150
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Located at: 38 Fraley Street Kane, PA 16735 -------------------------------------------------- Fax (814) 837-2267 Phone( (814) 837-9150 |
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Ratio Analysis Analysis of Profitability Ratios |
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General Explanation The owners of the company are primarily interested in the rate of return on equity invested in the company versus alternative investments. The rate of return is affected not only by the amount of net income but is also a result of the amount of leverage or borrowing a company has used. |
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| Profitability Ratios | ||||
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Gross margin % |
The
gross margin percentage reflects the relationship of
gross margin to sales as a percentage. |
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Operating income % |
The
operating income percentage reflects the percentage of
net income to sales as a percentage. |
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Net income % |
The
net income percentage reflects the relationship of net
income to sales as a percentage. |
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Return on assets |
he expression of net income to total
assets provides a basic measure of profit performance which can be used for
comparisons of operating results from year to year for the same company or
comparisons of results of different companies. |
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Return on stockholder's equity |
The
rate of return on the stockholder's investment in the
company provides a common measurement for comparison of
rates of return on alternative investments of equity
capital. |
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| Return on long-term debt & stockholder's equity |
A
comparison of net income to the sum of stockholder's
equity and long-term debt provides a rate of return
percentage on the total invested capital of the company
from creditors and stockholders. |
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Links to Other |
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