Profitability Ratios
Profitability Ratios Profitability is the ability of the business to generate profit. Profitability ratios measure the ability of the business to generate profit in relation to sales, investments, assets, equities, or ordinary shares outstanding.Return on Sales Formula: Profit ÷ Net Sales20162017201820192020 Net Income 2,500,647.79 2,925,423.82 3,386,921.85 3,862,280.28 4,425,645.84 Sales 6,717,857.14 7,406,437.50 8,165,780.44 9,002,996.91 9,925,023.08 Return on sales 0.37 0.39 0.41 0.43 0.45 This shows that the profit percentage per peso sales is increasing each year thus it is favorable to the entity.
Return on Totals AssetsFormula: Profit ÷ Average Total AssetsNet Income 2,500,647.79 2,925,423.82 3,386,921.85 3,862,280.28 4,425,645.84 Total Assets Beg. 2,137,572.97 3,570,953.47 4,963,098.33 6,331,199.74 Total Assets End 2,137,572.97 3,570,953.47 4,963,098.33 6,331,199.74 7,763,182.59 Total Asset Average2,137,572.972,854,263.224,267,025.95,647,149.0357,047,191.165Return on total asets 1.17 1.02 0 .79 0.68 0 .63This shows that the assets of the business are well employed by the management and these contributed in the overall profitability of the entity throughout the years.Return on Equity Formula: Profit ÷ Average Equity