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
