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Topic:	Business
Number of pages / Number of words:	4 / 973

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There are many ratios that perform this function such as:

Gross profit margin ratio:

Gross profit margin ratio is computed by dividing sales minus cost of sales, by sales. It measures the profitability of sales after cost of sales has been deducted, hence it reflects how efficiently the firmâ€™s management decides on pricing and production costs...

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It measures the profitability of sales after cost of sales has been deducted, hence it reflects how efficiently the firmâ€™s management decides on pricing and production costs. A lower ratio than the industry level will reflects a poor performance.

Net profit margin ratio:

This ratio is computed by dividing earnings after taxes, by sales...

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