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Profitability Ratio

Net Profit Margin: Formula, Calculation, Interpretation

January 21, 2025 · Ahmad Nasrudin

What's it: Net profit margin is a profitability ratio to measure how much profit is left (in percent) after the company has covered all its costs, including interest expense and taxes. We calculate it by dividing net profit by revenue.

Cash Flow Ratios: Examples, Formulas, and Interpretations

January 21, 2025 · Ahmad Nasrudin

What's it: Cash flow ratios are financial ratios calculated by comparing the metrics in the cash flow statement with other items in the financial statements. For example, cash from operations (CFO) is a commonly used metric. It is an

EBIT Margin: Calculation and Interpretation

January 21, 2025 · Ahmad Nasrudin

What's it: EBIT margin is a profitability ratio to measure how efficiently a company converts its revenue into profit before paying interest and taxes. We calculate it by dividing EBIT by revenue. A high ratio is better because the

NOPAT Margin: Formula, Calculation, and Interpretation

January 21, 2025 · Ahmad Nasrudin

What's it: NOPAT margin is a profitability ratio to measure how efficiently a company generates profit from its core business after accounting for expenses paid as taxes. We calculate it by dividing NOPAT by revenue. We use it as an

Return on Assets (ROA): Calculation and Interpretation

January 21, 2025 · Ahmad Nasrudin

What's it: Return on assets (ROA) is a profitability ratio to measure how well a company uses its assets to generate profits. This ratio tells us about the returns the company gets on its assets. We calculate it by dividing net profit

EBIAT Margin: Formula, Calculation, and Interpretation

January 21, 2025 · Ahmad Nasrudin

What's it: EBIAT margin is a profitability ratio to measure how efficiently a company generates profit from all its activities before paying interest expense while taking taxes into account. We calculate it by dividing EBIAT by

Return on Common Equity (ROCE): Calculation and Interpretation

January 21, 2025 · Ahmad Nasrudin

What's it: Return on common equity (ROCE) is a profitability ratio for measuring the return to common stockholders on their invested capital. It is an alternative to return on equity (ROE) by isolating returns to preferred

Operating ROA: Formula, Calculation, and Interpretation

January 21, 2025 · Ahmad Nasrudin

What's it: Operating ROA is a profitability ratio to measure how well a company is using its assets to generate profits from its core business. We calculate it by dividing operating profit by total assets.Operating ROA provides

Return on Invested Capital (ROIC): Calculation and Interpretation

January 21, 2025 · Ahmad Nasrudin

What's it: Return on invested capital (ROIC) is a profitability ratio to measure how much profit is generated for every dollar invested in the company. We calculate it by dividing net income by the total invested capital, expressed as

DuPont Analysis: Formula, Decomposition, Interpretation, Pros, Cons

January 27, 2025 · Ahmad Nasrudin

What's it: DuPont analysis is an approach to breaking down the ratio of return on equity (ROE) into several specific ratios. It helps us know why a company's ROE is superior (inferior) to competitors. If we compare the components from year to

Pretax Profit Margin: Its Calculation and Interpretation

January 23, 2025 · Ahmad Nasrudin

What's it: Pretax profit margin is a profitability ratio to measure how successfully a company converts revenue into profit before part of it is paid out as tax. We calculate it by dividing profit before tax (pretax profit) divided by

Profitability Ratio: Formulas, Types, and Examples

January 21, 2025 · Ahmad Nasrudin

What's it: Profitability ratio is a financial ratio to measure the company's ability to generate profit. Profitability ratios are a key driver of a firm's value and hence, an important factor for valuing its share price. As a result,

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