profitability ratio

Profitability Ratio

Any ratio that measures a company's ability to generate cash flow relative to some metric, often the amount invested in the company. Profitability ratios are useful in fundamental analysis which investigates the financial health of companies. An example of a profitability ratio is the return on investment which is the amount of revenue an investment generates as a percentage of the amount of capital invested over a given period of time. Other examples include return on sales, return on equity, and return on common stock equity.

profitability ratio

A comparison of two or more financial variables that provide a relative measure of a firm's income-earning performance. Profitability ratios are of interest to creditors, managers, and especially owners. Compare return on common stock equity, return on equity, return on investment, return on sales. See also common-size statement, gross profit margin, net profit margin.

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According to the company's management, this year the company is planning to increase its profitability ratio, which last year stood at 4.41 percent.

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The profitability ratio (net profit margin) is calculated as net income divided by total revenue.

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As for the profitability ratio, the outcome of the September survey points no further deterioration, as the balance of answers rose to -3 percent from last monthCOs -17 percent.

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Analysts traditionally have considered the return on investment ratio to be the key profitability ratio. The cash-generating ability of the assets also should be key in the evaluation of investments.

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26.1 65.3 107.8 Liquidity ratios Current Ratio 2.24 1.60 1.42 Quick Ratio 1.14 0.93 0.79 Leverage ratios Debt Ratio 0.26 0.35 0.38 Debt-to-equity Ratio 0.34 0.54 0.62 Times interest earned Ratio 4.68 4.17 3.79 Activity ratios Fixed asset turnover Ratio 8.15 5.97 5.94 Total asset turnover Ratio 1.57 1.54 1.75 Profitability ratio Gross profit margins Percent 16.57 16.78 18.47 Return on total assets before interest and taxes Percent 4.19 5.51 5.73 Return on total equity Percent 5.43 8.04 8.39 Size (2001) (2,3) Measure/Item Super Small Medi.

How is your co-op doing? Tables give local co-ops a chance to compare their performance to national averages