Profitability Ratios

Gross Profit Margin (^)

Gross profit / sales revenue

-> margin between selling price and cost of goods sold

Profit Margin Ratio (^)

Profit / Sales

-> amt of profit generated by each dollar of sales

Asset Turnover (^)

net sales/average total assets

-> how efficiently assets are used to generate sales

Return on Assets (ROA) (^)

Profit /Average Total Assets

-> overall profitability of assets

Return on Equity (ROE) (^)

Profit / Average Stockholders' Equity

-> profitability of shareholders investment

earnings per share formula (^)

Profit - preferred dividends / weighted average common shares outstanding

-> amt of profit earned on each common share

Price/Earnings (P/E) Ratio (^)

market price per share/earnings per share

-> rls between market price per share and earnings per share

Payout Ratio (^)

Cash Dividends/Profit

-> percentage of profit distributed as cash dividends