Profitability ratios

Profitability ratios - the company's ability to turn its...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Profitability ratios Profitability ratios measure a company's operating efficiency, including its ability to generate income  and therefore, cash flow. Cash flow affects the company's ability to obtain debt and equity financing. Profit margin.  The  profit margin ratio , also known as the operating performance ratio, measures 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: the company's ability to turn its sales into net income. To evaluate the profit margin, it must be compared to competitors and industry statistics. It is calculated by dividing net income by net sales. 20X1 20X0 Net income/(loss) $ 8,130 $(1,400) Net sales 129,000 97,000 Profit margin 6.3% (1.4%)...
View Full Document

This note was uploaded on 11/15/2011 for the course ACCT 2310 taught by Professor Staff during the Spring '09 term at Texas State.

Page1 / 2

Profitability ratios - the company's ability to turn its...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online