BUSS1030 Lecture Notes - Lecture 9: Gross Margin, Financial Ratio, Gross Profit

• School: University of Sydney
• Department: Business Studies
• Course: BUSS1030
• Professor: Abdul Razeed

Document Summary

Lecture 9 analysis and interpretation of financial statements (don"t need to memorise ratio) Every user has different needs and the info they want can be given to them by ratio analysis. Example of how to calculate ratios: best way to explain ratios is to work through an example (see example 8. 1, alexis. Profatability ratio: looking at wealth of business. Includes: return on ordinary shareholders" funds/return on equity, return on capital employed, operating profit margin, gross profit margin. In order to make a comparison, need to compare to something. Operating profit margin: relates the operating profit for the period to the sales during that period, before interest and tax, operating expenses eg. electricity find a cheaper electricity provider. Increase in sales doesn"t mean increase in margins. This can be caused by higher cost of goods sold or sales has decreased. This affects your gross profit margin: lower gross profit margin shows you might need to find cheaper sources this is analysing.