00 60600x 1000 salesrevenue x100 100 gearingratio

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Unformatted text preview: perating profit margin Operating profit x 100% (120/600) 20.00% (60/600) x 10.00% Sales revenue x 100% 100% Gearing ratio Total long­term borrowings x 100% [300/(231 56.50% [(450/(327 57.2% Share capital plus reserves + + 300)] x + 450)] x lo ng­term borrowings 100% 100% Additional ratios could have been calculated and these might have offered a fuller picture. The ratios reveal that there has been a 10 per cent reduction in the gross profit margin; it has halved. Though annual sales revenue has remained constant over the two­year period, there has been a significant increase in the cost of sales during the current year. Annual expenses have remained unchanged over the two­year period and so the decline in gross profit margin is has been reflected in a similar decline in the operating profit margin. The fall in...
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