Profitability Ratios

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

Gross Profit Ratio = Gross Profit x 100 / Sales

Where Gross Profit = sales – direct costs

Net Profit Ratio = Net Profit x 100 / Sales

Return on Assets = Net Income / Average Total Assets

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

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

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