Profitability is the basis for company's effectiveness assessment. To evaluate the profitability one may use the ratios relating selected profit type given in the profit and loss statement (typically the net profit) to the level of sales, assets or equity. The greater the values of these ratios, the better the company's profitability. There are no reference values for the ratios, thus to assess them we analyse how they change in time.
- Knowledge base
- Financial analysis
- Introduction
- Liquidity ratios
- Debt management ratios
- Efficiency (activity) ratios
- Introduction
- Total assets turnover
- Tangible fixed assets turnover
- Intangible assets turnover ratio
- Inventory/stock turnover ratio (in days)
- Receivables turnover ratio (in days)
- Trade receivables turnover ratio (in days)
- Liabilities turnover ratio (in days)
- Trade liabilities turnover ratio (in days)
- Operating cycle (in days)
- Cash conversion cycle (in days)
- Operating costs ratio
- Financial costs ratio
- Profitability ratios
- General performance ratios
- Own financial ratios
- Models of bankruptcy prediction
- Financial data manipulation detection - Beneish model
- PaLS and balance sheet analysis - dynamics
- PaLS and balance sheet analysis - percentage composition
Profitability ratios - Introduction
The group of profitability ratios includes: