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9 Cards in this Set
- Front
- Back
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What is the Gross Profit Ratio?
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Gross profit / Net Sales x 100
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What is the Net Profit Ratio?
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Net Profit / Net Sales x 100
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What is the Return on Owners Equity Ratio?
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Net Profit / Average Owners Equity x 100
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Define the Gross Profit Ratio
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Indicator of the margin of profit available to cover expenses
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Define the Net Profit Ratio
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Shows how much of each dollar of sales represents net operating profit and indicates the margin of profitability
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Define the Return on Owners Equity Ratio
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Indicates the rate of return on owners equity invested in the business
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Strategies to improve the Gross Profit Ratio
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-an increase in sales (price increase or an advertising campaign)
-a decrease in cost of goods sold (better buying or reducing theft or wastage) |
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Strategies to improve the Net Profit Ratio
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- expense control methods
- pricing practises - selling techniques |
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Strategies to improve the Owners Equity Ratio
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increase profits of reduce owners equity
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