Return on Capital Employed ( ROCE): It provides information on the return earned by a company on a capital invested by investors. ROCE should always be higher than the rate at which the company borrows, otherwise any increase in borrowing will reduce shareholders' earnings.
ROCE% = Net ProfitCapital Employed x100
Return on Equity (ROE): The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.
ROE% = Net Profit Shareholder's Equity X 100
Operating profit : Profit generated by a company's operations before interest payments and tax.
Operating Profit = Operating ProfitNet Sales x 100
Gross profit ratio: The gross profit ratio indicates how much of each sales pound is available to meet expenses and profits after merely paying for the goods that were sold.
Gross Profit Ratio = Gross ProfitSales x 100
Total assets turnover ratio: This ratio is useful to determine the amount of sales that are generated from each pound of assets.
Assets Turnover Ratio= RevenueTotal Assets
Fixed asset turnover ratio: The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-asset investments. A higher fixed-asset turnover ratio shows that the company has been more effective in using the investment in fixed assets to generate revenues.
Fixed Asset Turnover = Net SalesNet Property, Plant and Equipment
Efficiency/Management of Working Capital
Average settlement period for trade receivables ratio: An efficiency ratio that measures the average period for which inventories are held by a business.
Average Settlement period for trade receivables = Average Inventory held Cost of Sales x 52 weeks
Stock Holding period ratio: It measures the rate at which stock moves through the...