Ratio Analysis & Interpretation

Ratios interpret the financial statements.

Profitability

Gross profit margin $= \frac{\text{gross profit}}{\text{revenue}}\times100$.
Net profit (profit for the year) margin $= \frac{\text{profit}}{\text{revenue}}\times100$.
Return on capital employed (ROCE) $= \frac{\text{profit}}{\text{capital employed}}\times100$ — how well capital generates profit.