Submitted by: Submitted by tonyspring
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Words: 728
Pages: 3
Category: Business and Industry
Date Submitted: 03/04/2010 06:34 PM
SUMMARY OF FINANCIAL ACCOUNTING RATIO
PROFITABILITY RATIO:
|Financial Ratio |Formula |Measurements |
|Return on Total Assets |Operating profit before income tax + interest|Measures rate of return earned through operating total assets |
| |expense/ Average total assets |provided by both creditors and owners |
|Return on ordinary |Operating profit & extraordinary items after |Measures rate of return earned on assets provided by owners |
|shareholders’ equity |income tax minus Preference dividends / | |
| |Average ordinary shareholders’ equity | |
|Gross Profit Margin |Gross Profit / Net Sales |Profitability of trading and mark-up |
|Profit Margin |Operating profit after income tax / Net Sales|Measures net profitability of each dollar of sales |
| |Revenue | |
MARKET BASED FINANCIAL RATIO:
|Financial Ratio |Formula |Measurements |
|Earnings per share |Operating profits after income tax less |Measures profit earned on each ordinary share |
| |Preference dividends / Weighted average | |
| |number of ordinary shares issued | |
|Price-earnings ratio |Market price per ordinary share / Earnings...