MGIS 317 Lecture Notes - Gross Margin, Gross Profit, Profit Margin

68 views2 pages

Document Summary

Differences between one years and the next current assets and liabilities. Making these calculations can be good for the business but many problems may also arise: You cannot tell exactly about the two businesses performance just by looking at figures. You cannot tell the profitability of the businesses. To do exact calculations for this you need to use these two types of ratio: Profitability ratios: these include the profit margin ratios which compare the profits of the business with the sales revenue. Liquidity ratios: these give a measure of how easily a business could meet its short term debts. Gross profit ratio is used to compare the gross profit with the sales turnover. Net profit margin is used to compare the net profit with sales revenue. These ratios assess the ability of the firm to pay its short-term debts. They are not concerned with profits, but with the working capital of the business.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents