Profitability Ratios

Net Profit Margin (Return on Sales): A measure of net income dollars generated by each dollar of sales. Formula: Net Income * Net Sales * Refinements to the net income figure can make it more accurate than this ratio computation. They could include removal of equity earnings from investments, “other income” and “other expense” items […]

Ratio Analysis

Ratio analysis is the quantitative analysis of financial information from a company’s financial statements or share price. Ratios are key to financial analysis, as they provide input for evaluating and comparing a company to its peers, or to an industry benchmark. Ratios provide the vital signs used to measure corporate health, allowing investors to drill down […]