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11 Cards in this Set

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What is the Gross Profit Ratio
Gross Profit
--------------------- X 100
Net Sales
What is the Net Profit Ratio
Net Profit
------------------ X 100
Net Sales
What is the Rate of Returns on Owner's Equity?
Net Profit
----------------------------------- X 100
Average Owner's Equity
What is the Gross Profit Ratio?
Gross Profit
---------------------- X 100
Net Sales
What does the Gross Profit Ratio indicate?
It indicates the margin of profit avaiable to cover expenses.
What can be done to improve the Gross Profit Ratio?
- An increase in sales, with a less than preportional decrease in the COGS.
- A decrease in the COGS, with a less than preportional decrease in sales.
What is the Net Profit Ratio?
Net Profit
------------------- X 100
Net Sales
What does the Net Profit Ratio indicate?
It clearly indicated the margin of profitability.
What can be done to improve the Net Profit Ratio.
- Expense control methods
- Pricing practices
- Selling techniques
What is the Rate Of Return On Owner's Equity?
Net Profit
--------------------------------- X100 Avergage Owner's Equity
What does the Rate Of Return On Owner's Equity indicate?
This ratio indicates the rate of return on Owner's equity invested in the business.