Profitability
Ratios
Type of Ratios
₹ Liquidity
Current Ratio
Quick Ratio
Cash Ratio
Operating Cash Flow Ratio
Turnover
Fixed Assets Turnover Ratio
Inventory Turnover Ratio
Receivables Turnover Ratio
Working Capital Turnover Ratio
Payables Turnover Ratio
Cash Conversion Cycle Ratio
Profitability
Gross Profit Ratio
Net Profit Ratio
Operating Profit Ratio
Return On Capital Employed Ratio
Return On Assets Ratio
Return On Equity Ratio
₹ Market Value
Profit/Earnings Ratio
Earnings Per Share (EPS)
Dividend Yield Ratio
Dividend Payout Ratio
Solvency
Debt to Equity Ratio
Debt to Assets Ratio
Debt Service Coverage Ratio
Interest Coverage Ratio
Gross Profit Margin
(Revenue - Cost of Goods Sold)
Gross Profit Margin =
Revenue
Interpretation: Reflects the efficiency of production. Higher margins
indicate better control over costs.
Operating Profit Ratio
Operating Income
Operating Profit Ratio =
Revenue
Interpretation: Shows the percentage of revenue that remains after
paying for variable costs of production. Higher ratios indicate more
efficient operations.
Return on Capital Employed (ROCE)
EBIT
ROCE =
Capital Employed
Interpretation: Measures a company's profitability and the efficiency
with which its capital is employed. Higher ratios suggest a more efficient
use of capital.
Net Profit Margin
Net Income
Net Profit Margin =
Revenue
Interpretation: Shows the percentage of revenue that remains as profit
after all expenses. Higher ratios suggest better overall profitability.
Return on Assets (ROA)
Net Income
Return on Assets (ROA) =
Average Total Assets
Interpretation: Indicates how efficiently a company uses its assets
to generate profit. Higher values are preferred.
Return on Equity (ROE)
Net Income
Return on Equity (ROE) =
Shareholder's Equity
Interpretation: Measures the profitability generated from shareholders'
investments. Higher ratios indicate effective management.