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Operating margin. In business, operating margin —also known as operating income margin, operating profit margin, EBIT margin and return on sales ( ROS )—is the ratio of operating income ("operating profit" in the UK) to net sales, usually expressed in percent. Net profit measures the profitability of ventures after accounting for all costs.
Profitability ratios measure the company's use of its assets and control of its expenses to generate an acceptable rate of return Gross margin, Gross profit margin or Gross Profit Rate [8] [9] Gross Profit / Net Sales :::OR ::: Net Sales - COGS / Net Sales
Return on capital ( ROC ), or return on invested capital ( ROIC ), is a ratio used in finance, valuation and accounting, as a measure of the profitability and value-creating potential of companies relative to the amount of capital invested by shareholders and other debtholders. [1] It indicates how effective a company is at turning capital into ...
DuPont analysis (also known as the DuPont identity, DuPont equation, DuPont framework, DuPont model, DuPont method or DuPont system) is a tool used in financial analysis, where return on equity (ROE) is separated into its component parts. Useful in several contexts, this "decomposition" of ROE allows financial managers to focus on the key ...
Return on investment. Return on investment ( ROI) or return on costs ( ROC) is the ratio between net income (over a period) and investment (costs resulting from an investment of some resources at a point in time). A high ROI means the investment's gains compare favourably to its cost. As a performance measure, ROI is used to evaluate the ...
This is a return of US$20,000 divided by US$100,000, which equals 20 percent. The US$20,000 is paid in 5 irregularly-timed installments of US$4,000, with no reinvestment, over a 5-year period, and with no information provided about the timing of the installments. The rate of return is 4,000 / 100,000 = 4% per year.
Return on tangible equity. Return on tangible equity ( ROTE) (also return on average tangible common shareholders' equity ( ROTCE )) measures the rate of return on the tangible common equity. ROTE is computed by dividing net earnings (or annualized net earnings for annualized ROTE) applicable to common shareholders by average monthly tangible ...
The return on equity (ROE) is a measure of the profitability of a business in relation to its equity; [1] where: . ROE = Net Income / Average Shareholders' Equity [1] Thus, ROE is equal to a fiscal year's net income (after preferred stock dividends, before common stock dividends), divided by total equity (excluding preferred shares), expressed as a percentage.