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Definition Paper

In: Business and Management

Submitted By jbizzle
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Definition Paper
Business operations uses a lot of ratios for company profitability. The profitability ratios estimate the company’s level of profitability by analyzing company sales and profit percentage of varieties of ratios.
Return on Equity: (ROE) This ratio calculates the company’s financing return on the portion that is offered by owners. ROE is calculated has net income divided by owners’ equity.
Return on Sales (ROS). This ratio can also be referred to as the profit margin; Return on sales is a method of calculating how sales interpret into bottom-line profit.ROS is calculated has net income divided by the revenue.
Return on Assets: (ROA) This ratio basically provides a quantitative report of how a company assets has being invested. ROA is calculated has net income by divided total assets.
Cumulative Profit: This can be defined has collective total of all profits generated from the beginning to the end financial year.
Market Capitalization: this can also be referred to as Market Cap. Market cap shows the value of stock price multiplied by value of shares outstanding
Asset Turnover: this ratio gives an idea about an estimate of how proficient a company assets is utilized. Another important ratio is the leverage.
Leverage: This ratio extensively illustrate how a company uses its debt. Financial analysts describe the word leverage a debt used by the company.
The financial health of a company ratio can be measured by the company’s level profitability, company’s operating leverage, other methods also estimates the financial health of the firm such as economic value added

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