Accountancy/Quick Reference/Accounting Ratios

Profit-Based Ratios

x	Gross Profit	Operating Profit (PBIT)	Net Profit	Profit After Tax
$\frac{100\mathrm{\%}}{Sales}$	Gross Profit Margin %	Operating Profit Margin %	Net Profit Margin %
$\frac{100\mathrm{\%}}{Equity+Debt}$		ROCE %
$\frac{100\mathrm{\%}}{Equity}$				Return on Equity %
$\frac{1}{Debt}$		Interest Cover
$\frac{1}{No.ofOrdinaryShares}$				Earnings per Share

The table shows how to calculate the ratios by multiplying the row and column headings together. e.g.

Gross Profit Margin % = $\frac{GrossProfit\times 100\mathrm{\%}}{Sales}$

Earnings per Share = $\frac{ProfitafterTax}{No.ofOrdinaryShares}$

Also

Sales = Turnover

Equity = Ordinary Share Capital + Reserves

Debt = Long Term Liabilities = Non-Current Liabilities

Capital Employed = Equity + Debt

Asset Turnover = Sales / (Fixed Assets + Net Current Assets)

Fixed Assets + Net Current Assets = Equity + Debt (Accounting Equation)

ROCE = Operating Profit Margin x Asset Turnover