Profitability Ratios 1.6 2007/11/20 11:03:24 US/Central 2008/02/15 11:20:00.114 US/Central Rudy Lopes rudyl@college-cram.com Rudy Lopes rudyl@college-cram.com BEP Ratio college-cram financial ratios profitability ratio Profit Margin return on assets return on equity ROA ROE Profitability ratios are used to assess a business' ability to generate earnings as compared to expenses over a specified time period. These tutorials define the ratios and walk you through the calculations, including where on the financial statements the numbers can be found. Return on AssetsReturn on assets (ROA) is a percentage of the after-tax income as compared to the total assets of the company. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the income statement and balance sheet.Return on Assets DuPontReturn on assets (ROA) is a percentage of the after-tax income as compared to the total assets of the company. Management at Du Pont came up with Return on Assets (Du Pont), an approach that determines the impact of asset turnover and profit margin on profits. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the financial statements.Profit MarginThe profit margin shows the relationship between net income (profit) and sales. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the income statement.Return on EquityReturn on equity (ROE) measures profitability related to ownership. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the financial statements.Return on Equity DuPontReturn on equity (ROE) measures profitability related to ownership. Management at Du Pont came up with Return on Equity (Du Pont), an approach that showed that return on equity depends on ROA and the equity multiplier. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the financial statements.

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Basic Earning Power RatioThe basic earning power ratio (or BEP ratio) compares earnings apart from the influence of taxes or financial leverage, to the assets of the company. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the financial statements.Earnings Per ShareEarnings per share (EPS) is a way to relate income to ownership on a per share basis, and is used in evaluating share price. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the financial statements.Gross Profit RatioThe gross profit ratio indicates how much of each sales dollar is available to meet expenses and profits after merely paying for the goods that were sold. This interactive tutorial explains the gross profit ratio by walking you through the steps, including where Sales and Cost of Goods Sold are on the Income Statement. It lets you use your own numbers -- great for checking homework answers!Profitability Ratio Study SheetBasic Earning Power (BEP), Earnings Per Share (EPS), Gross Profit, Profit Margin, Return on Assets (ROA), Return on Equity (ROE), ROA DuPont, and ROE Dupont ratios are all explained on this printable Smartacus Study Sheet.