Ratio Essay

573 Words Dec 17th, 2011 3 Pages
Profitability ratios measure the company's use of its assets and control of its expenses to generate an acceptable rate of return Gross margin, Gross profit margin or Gross Profit Rate[7][8] [pic] OR [pic] Operating margin, Operating Income Margin, Operating profit margin or Return on sales (ROS)[8][9] [pic] Note: Operating income is the difference between operating revenues and operating expenses, but it is also sometimes used as a synonym for EBIT and operating profit.[10] This is true if the firm has no non-operating income. (Earnings before interest and taxes / Sales[11][12]) Profit margin, net margin or net profit margin[13] [pic] Return on equity (ROE)[13] …show more content…
Debt ratios measure financial leverage. Debt ratio[23] [pic] Debt to equity ratio[24] [pic] Long-term Debt to equity (LT Debt to Equity)[24] [pic] Times interest-earned ratio / Interest Coverage Ratio[24] [pic] OR [pic] Debt service coverage ratio [pic]

[edit] Market ratios

Market ratios measure investor response to owning a company's stock and also the cost of issuing stock. These are concerned with the return on investment for shareholders, and with the relationship between return and the value of an investment in company’s shares. Earnings per share (EPS)[25] [pic] Payout ratio[25][26] [pic] OR [pic] Dividend cover (the inverse of Payout

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