Financial ratio's - Profitability
3 important questions on Financial ratio's - Profitability
What does the ROCE measure?
Business performance. It expresses the relationship between the operating profit generated during a period and the average long-term capital invested in the business.
What does the gross profit margin relate to?
The gross profit of the business to the sales revenue generated for the same period. It represents the difference between sales revenue and cost of sales.
Which ratios can be used to evaluate the profitability of the business?
- Return on ordinary shareholders' funds ratio (ROSF)
- Return on capital employed ratio (ROCE)
- Operating profit margin ratio
- Gross profit margin ratio
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