AAKASHAYA PATRA SEVEN STAR SMART EDUCATION SERIES PART – 53 : 15.08.2020

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     Financial Ratios Profitability Ratios

Financial Ratios can be broadly classified into

 1. Profitability Ratios

2. Liquidity Ratios

3. Management Efficiency Ratios

4. Leverage Ratios

5. Valuation Ratios

Profitability ratios are used to evaluate the company's ability to generate income as compared to its expenses and other cost associated with the generation of income during a particular period.These ratios convey how well the company is able to perform in terms of generating profits.

Profitability ratios are the most popular ratio used in fundamental analysis of securities as it is the profits which are not only need for business expansion but are also needed to pay dividends to shareholders of the company.

Some of the commonly used Profitability Ratios include –

1. Gross Profit Margin

2. EBITDA Margin (Operating Margin)

3. PAT Margin

4. Return on Equity (ROE)

5. Return on Capital Employed (ROCE)

6. Return on Asset (ROA)

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