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3.5 Profitability & liquidity ratio analysis
Accounting ratios
Profitability ratios
Gross profit margin (%):
Net profit margin (%):
Return on capital employed (%):
Capital employed: = (non-current assets + current assets) current liabilities or non-current liabilities + shareholders’ equity. The total capital invested in the business.
Liquidity ratios
Current ratio:
Acid test ratio:
Liquid assets = Current assets - Inventories
3.5 Profitability & liquidity ratio analysis
Accounting ratios
Profitability ratios
Gross profit margin (%):
Net profit margin (%):
Return on capital employed (%):
Capital employed: = (non-current assets + current assets) current liabilities or non-current liabilities + shareholders’ equity. The total capital invested in the business.
Liquidity ratios
Current ratio:
Acid test ratio:
Liquid assets = Current assets - Inventories