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Profitability ratios
Profitability ratios
Profitability ratios
Profitability ratios
Profitability ratios
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Profitability ratios

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Understanding financial data provides historical insight in turn possible strategies to correct or enhance future business results. http://bit.ly/11wGY6K

Understanding financial data provides historical insight in turn possible strategies to correct or enhance future business results. http://bit.ly/11wGY6K

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  1. Profitability RatiosFood Beverage Manager
  2. AVERAGE COLLECTION PERIODAverage collections period = Debtors x 365 /Sales The number of day’s credit the firm gives to customers. The longer the period the more costs to the firm in outstanding debts. C A Bird - F&B Manager Tel: 0203 011 5863 Web: http://bit.ly/VW9X07 Page 2
  3. RETURN ON EQUITYReturn on equity = Profit after tax x 100 /Shareholders funds Measures the rate of return or profitability of the shareholders’ investment in the company. C A Bird - F&B Manager Tel: 0203 011 5863 Web: http://bit.ly/VW9X07 Page 3
  4. GROSS PROFIT MARGINGross profit margin = Profit before interest &tax / Sales Shows the total margin available to cover operating expenses & still yield a profit.  Usefulfor comparison over time & with industry norms. C A Bird - F&B Manager Tel: 0203 011 5863 Web: http://bit.ly/VW9X07 Page 4
  5. NET PROFIT MARGINNet profit margin = Net profit after tax / Sales Shows how much after-tax profit is generated by each pound of sales.  Also useful for comparison overtime time & with industry norms. C A Bird - F&B Manager Tel: 0203 011 5863 Web: http://bit.ly/VW9X07 Page 5

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