Accounts receivable represent sales for which payment has not yet been collected. If your business normally extends credit to its customers, the payment of accounts receivable is likely to be your ... |
Fixed asset turnover is the ratio of sales (on your income statement) to the value of your fixed assets (on ... |
The ratio of total sales (on your income statement) to total assets (on your balance sheet) indicates how well ... |
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 ... |
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 ... |
