Ratio analysis

Ratios

Profitability :

Gross profit margin:

Gross profit / Sales x 100 = %

Measures the amount of gross profit generated in relation to sales.

For every 1pound of sales how much is Gross profit

Mark up :

Gross profit / Cost of sales x 100 = %

Measures how much gross profit is being made in relation to the cost of sales

For every 1pound of cost of sales how much is gross profit

If both of the %'s are increasing: 

1) the business may have changed…