Gross Profit Margin =
= ( 3,074,000 - 2,088,000 ) ÷ 3,074,000
= 32.1 %
It was 30.1% last year , So Gross profit margin has been developed and increased in (2020 )
The More The better
- The Operating Profit Margin (EBIT) Margin :
3) Operating Profit Margin =
or =
- Analysts should be concerned if this ratio is too low.
- Some analysts prefer to calculate the operating profit margin by adding back depreciation and any amortization expense to arrive at earnings before interest, taxes, depreciation, and amortization (EBITDA).
- Assume that :
( profit ) earning available to Common Stockholders (year 2020 ) =$ $221,000 Sales = $3,074,000 , COGS= $ 2,088, 000 , Operating Profit ( EBIT ) = $418,000
So :
- Operating Profit Margin = or =
= $418000÷ $3, 074,000= 13.6 %
It was 11.8 % last year ( 2019 ) , So Operating Profit Margin for 2020 is better than 2019
The More the better
- The Earning per share :
4) Earning Per Share =
- High ratio indicated that more earning available For common stockholder
Assume that
Earning available for Common Stockholders = $ 221 , 000 , No, of Shares outstanding = 76,262
So
Earning Per Share =
= $221,000 ÷ 76,262 = $ 2.90
It indicates that each of outstanding share of common has earned $ 2.90 , The More The Better
- Assume that :
Earning available for Common Stockholders = $ 221 , 000 , No, of Shares outstanding = 76,262 , Total assets = $ 3, 597, 000
So return on assets (ROA) =
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