Profitability Ratios Calculator
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Calculator Use
This calculator will find solutions for up to four measures of the profitability of a business or organization - return on assets, return on equity, gross profit margin, operating profit margin, net profit margin, earnings per share, and price/earnings (P/E) ratio. The calculator can calculate one or two sets of data points, and will only give results for those ratios that can be calculated based on the inputs provided by the user.
- If you are analyzing one company over a single reporting period, fill in the known data points in column A and press calculate - the results will display below.
- If you are analyzing two companies or a single company over two reporting periods, use both column A (primary) and B (secondary). For each data point and ratio that has a value in both columns, the change expressed as a percent increase or decrease will also be calculated.
The significant figures drop select box only determines rounding for the ratios themselves. Percent changes are always calculated to four significant figures.
Calculations Used in this Calculator
- Return on Assets = net income ÷ total assets
- Return on Equity = net income ÷ shareholder's equity
- Gross Profit Margin = gross profit ÷ sales
- Operating Profit Margin = operating profit ÷ sales
- Net Profit Margin = net income ÷ sales
- Earnings per Share = net income ÷ common stock outstanding
- Price/ Earnings Ratio = market price per share ÷ (net income ÷ common stock outstanding)
Input Definitions
- Net Income
- Gross income minus interest and taxes.
- Total Assets
- Current and long term assets.
- Shareholder's Equity
- Total value currently invested into a company by shareholders, owners, investors, etc...
- Gross Profit
- Revenue minus the cost of goods or services sold.
- Sales
- Total amount of currency that was earned with no expenses deducted.
- Operating Profit
- Gross profit minus expenses.
- Common Stock Outstanding:
- Number of shares of common stock currently in circulation.
- Market Price per Share
- Trading price per share of common stock.
Ratio Definitions
- Return on Assets
- Measures the efficiency in generating profits with the available assets.
- Return on Equity
- Quantifies the return on owners’/stockholders’ investment.
- Gross Profit Margin
- Measures how much of every dollar of sales the company makes after paying cost of goods sold.
- Operating Profit Margin
- How much of every dollar of sales the company makes after paying variable costs and before taxes, interest, and preferred stock dividends.
- Net Profit Margin
- How much of every dollar does a company actually keep?
- Earnings per Share
- Earnings per share of common stock in circulation.
- Price/ Earnings Ratio
- A measure of how much investors are willing to pay per dollar of a company's earnings.