Chapter 40, Profitability ratios Flashcards Preview

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Flashcards in Chapter 40, Profitability ratios Deck (4)
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1
Q

Gross Profit Margin

A

level of profit as a percentage of the sales turnover

gross profit/sales x 100

2
Q

Net profit Margin

A
takes it account direct and indirect costs 
net profit (operating profit) / sales x 100
3
Q

Return on Capital Employed

A

measures the net profit as a percentage of the capital employed
Operating profit/capital employed x 100

4
Q

Return on equity

A

measures ability of a business to generate profits from its shareholders investment into the business