Genral profitability ratio
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This document defines and provides formulas for calculating four financial ratios: gross profit ratio, net profit ratio, operating ratio, and operating profit ratio. It then provides financial information for a company and asks the reader to calculate the values of these four ratios based on the data.
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This document provides definitions and formulas for calculating various profitability ratios, including:
- Gross profit margin, which measures a company's gross profit as a percentage of total sales. An example calculation shows a GPM of 35.56%.
- Operating profit margin, which measures operating income as a percentage of total sales. An example shows an OPM of 22.22%.
- Net profit margin, which measures net income as a percentage of total sales. An example shows an NPM of 18.22%.
- Several ratios are provided to measure returns, including return on assets, return on equity, and return on sales. Formulas and example calculations are given for each.
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Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
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Any substance (other than food) that is used to prevent, diagnose, treat, or relieve symptoms of a
disease or abnormal condition
How to Setup Warehouse & Location in Odoo 17 Inventory
In this slide, we'll explore how to set up warehouses and locations in Odoo 17 Inventory. This will help us manage our stock effectively, track inventory levels, and streamline warehouse operations.
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Genral profitability ratio
- 1. Dr. Pradeep Kumar.K.S Assistant Professor KSMDB College
- 2. This ratio discloses the relationship prevailing between the gross profit and net sales and expressed in percentage. The following formulae are used to calculate Gross Profit Ratio
- 3. Gross Profit Ratio = (Gross Profit /Net Sales x100) OR Gross Profit Ratio = (Sales — Cost of Goods Sold) / Net Sales x 100
- 4. Net Profit Ratio This ratio indicates the efficiency of management on Manufacturing, Administrative, Selling and other business activities.
- 5. Net Profit Ratio = Net Profit after Tax / Net Sales x 100 OR Net Profit Ratio = Net Profit / Net Sales x 100
- 6. Operating Ratio This ratio discloses the relationship prevailing between the operating cost and sales in percentage. It indicates the cost of operations per rupee of sales.
- 7. Operating Ratio = Operating Cost / Net Sales x 100 Operating Cost = Cost of goods sold + Operating Expenses Operating Expenses = Office and Administrative Expenses + Selling and Distribution Expenses
- 8. Operating Profit ratio= 100- Operating ratio OR Operating Ratio= Operating Profit/Net Sales x 100 Operating Profit = Net Sales – Operating Cost
- 9. From the following information calculate 1.Gross Profit ratio 2. Operating ratio 3.Operating Profit ratio 4.Net profit ratio
- 10. Revenue from Operation Rs 26,80,000 Return Outwards Rs 20,000 Opening Inventory Rs 4,00,000 Closing Inventory Rs 5,00,000 Purchases Rs 16,20,000 Returns Inwards Rs 30,000 Wages Rs 3,00,000 Carriage Rs 2,00,000 Rent Received Rs 2,00,000
- 11. Selling and Distribution Expenses Rs 120000 Income Tax Rs 80,000 Profit on Sale of Furniture Rs 60,000 Loss on Sale of Machinery Rs 40,000 Rent paid Rs 60,000