Profitability Ratios Calculator
Dive deep into your financial statements. This tool calculates the essential ratios used by Wall Street and Main Street to judge how well a company generates profit relative to its size and costs.
What are profitability ratios?
Profitability ratios are financial metrics used by analysts and investors to measure and evaluate the ability of a company to generate income (profit) relative to its revenue, operating costs, balance sheet assets, or shareholders' equity.
What is the difference between ROA and ROE?
Return on Assets (ROA) measures how efficiently a company uses its total assets to generate profit. Return on Equity (ROE) measures how effectively a company uses its shareholders' equity to generate profit. ROE is generally higher than ROA if the company uses debt financing.
What does "Net Profit Margin" tell you?
Net profit margin shows what percentage of each dollar of revenue is left as profit after all expenses, taxes, and interest have been paid. It is a key indicator of a company's overall financial health and pricing strategy.
What is a "good" profit margin?
This varies wildly by industry. For example, software companies often have net margins over 20%, while grocery stores may operate on margins as low as 1-2%. Always compare a company's ratios to its industry peers.