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Profitability Ratios

Earnings Per Share (EPS)

Earnings Per Share (EPS) = Net Income / Weighted Average Number of Common Shares Outstanding


Gross Profit Ratio

Gross Profit Ratio = Gross Profit x 100 / Sales

Where Gross Profit = sales – direct costs


Net Profit Ratio

Net Profit Ratio = Net Profit x 100 / Sales


Return on Assets

Return on Assets = Net Income / Average Total Assets

Where Total Assets = (Beginning Total Assets + Ending Total Assets) / 2


Return on Equity (ROE)

Return on Equity (ROE) = Net Income / Average Stockholders´ Equity

Where Average Stockholders´ Equity = (Beginning Stockholders´ Equity + Ending Stockholders´ Equity) / 2

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