Profitability Financial Ratios

The Gross Margin Ratio is a financial metric that measures the proportion of money left over from revenues after accounting for the cost of goods sold (COGS). It indicates the percentage of sales revenue that exceeds the COGS, reflecting the efficiency of a company in managing its production costs relative to its sales.

The Operating Margin is a financial metric that measures the proportion of a company's revenue left after paying for variable costs of production, such as wages and raw materials. It indicates how much profit a company makes from its operations before deducting interest and taxes, reflecting its operational efficiency and pricing strategy.

Return on Equity (ROE) is a financial metric that measures the profitability of a company in generating earnings from its shareholders' equity. It indicates how effectively the management is using the company’s assets to create profits and is a key indicator of financial performance and efficiency.

Return on Net Assets (RONA) is a financial performance metric that measures how efficiently a company uses its net assets to generate profit. It indicates the profitability and operational efficiency of a business by comparing its net income to its net assets. A higher RONA value signifies better asset utilisation and profitability.