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Profitability Ratios

April 13, 2006

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You can use another set of ratios to assess the profitability of your business and changes in its profit performance. These ratios are probably the most important indicators of your business's financial success. Investors (including yourself, as business owner) will be interested in these ratios insofar as they demonstrate the performance and growth potential of the business:

• gross profit margin ratio
• net profit margin or net profit percentage
• operating profit percentage
• return on assets
• return on equity

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