ACCT20200 Study Guide - Quiz Guide: Asset, Income Statement, Finished Good
Document Summary
Gross margin percentage (equation) = gross margin / sales. Gross margin percentage (definition) = this measure indicates how much of each sales dollar is left after deducting the cost of goods sold to cover expenses and provide a profit. Net profit margin percentage (equation) = net income / sales. Net profit margin percentage (definition) = in addition to cost of goods sold, this ratio also looks at how selling and administrative expenses, interest expense, and income tax expense influence performance. Return on total assets (equation) = (net income + [interest expense x (1-tax. Return on total assets (definition) = a measure of efficiency because assets. Rate)]) / average total assets are used to generate net income. Return on equity (equation) = net income / average stockholder"s equity. Return on equity (definition) = this measure indicates how well the company used the owners" investments to earn income. Financial leverage = = comparison of interest rate rap on debt vs. return on.
