Profitability Ratios:

Measures the degree of success a company produces revenue compared to expense

Profit Margin On Sales

Profit margin on sales is a profitability ratio that measures net income per dollar sales. It is used for analyzing the use of property, plant and equipment. A high number is better, but be aware that heavy debt financing will lower this number, yet may have a positive effect on return to stockholders’ investment.

Return On Assets

Return on Assets (ROA) is a profitability ratio that measures the efficiency of using assets to generate revenue; it is sometimes called “return on investment” and "Rate Of Return On Assets". . Average total assets = ( beginning assets + ending assets) / 2

Basic Earning Power

Basic earning power (BEP) ratio measures the raw earning power of the business’ assets, before the influence of taxes and interest. BEP is useful when comparing businesses with different degrees of financial leverage and tax rates.

Return On Common Stock Equity

Return on common stokeholds’ equity is a profitability ratio that measures the efficiency of generating revenue for the benefit of common stockholders. This ratio is in measuring profitability from the owners’ point of view.

Earnings Per Share

Earnings per share measures income earned on each share of common stock. This ratio may be single most important variable in determining a share’s price.

Price-Earnings Ratio

Price-earnings (P/E) ratio is the price per share to earnings per share, also called “price multiple” or “earnings multiple”. A higher P/E suggests investor's expectation of earnings growth.

Payout Ratio

Payout ratio is the portion of earnings paid out to owners. A lower ratio the more secure the payouts. Very low payout ratios indicate the business is focused on retaining earnings, usually to fund growth.