Your gross profit margin can be calculated with the following formula, using figures taken from your income statement: |
The operating profit percentage can be calculated using the following formula, with figures taken from your income statement: |
Your net profit margin shows you the bottom line: how much of each sales dollar is ultimately available for you, the owner, to draw out of the business or to receive as dividends. It's probably the ... |
Return on assets is the ratio of net income to total assets. It is basically a measure of how well your business is using its assets to produce more ... |
The return on equity ratio can be calculated using the following formula: |
The final group of ratios are designed to help you measure the degree of financial risk that your business faces. "Financial risk," in this context, means the extent to which you have debt ... |
The debt-to-equity ratio can be computed with the following formula, using figures from your balance sheet: |
This ratio measures the percentage of a business's assets that are financed with debt, and can be calculated using the following formula: |
Coverage of fixed charges is also sometimes called "times fixed charges earned." |
Interest coverage is also sometimes known as the "times interest earned ratio." It is very similar to the "times fixed charges earned" ratio but focuses more narrowly on the interest portion of your ... |
