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**Unformatted text preview: **ility Ratios Gross profit percentage = gross profit/net sales Operating margin percentage = income from operations/net sales Net profit margin percentage = net income/net sales Return on assets = {net income + [interest expense * (1 – tax rate)]}/average total assets Return on equity = net income/average equity lder Ratios Earnings per Share (EPS) Ratio = (net income – preferred dividends)/average number of common shares outstanding Return on common equity = net income/average common equity Dividend yield ratio = dividends per common share/Closing Market Price per Share for the Year Dividend payout ratio = common dividends paid/net income Total payout ratio = (common dividends + common stock repurchases)/net income Stock repurchase payout ratio = Total Payout Ratio - Dividend Payout Ratio Analysis Return on Equity = [(Net Income/Sales)*(Sales/Average Total Assets)*(Average Total Assets/Average Equity)]...

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