Calculation Examples of Profitability Ratios Analysis. 1 #1 – Gross profit. = Net sales – Cost of goods sold. So form the above calculation, gross profit will be: 2 #2 – Net profit = $31,000. 3 #3 – EBITDA. = Net profit + Interest expense + Tax + Depreciation expense. So from the above calculation, EBITDA will be:

Net Profit Margin: When doing a simple profitability ratio analysis, the net profit margin is the most often margin ratio used. The net profit margin shows how much of each sales dollar shows up as net income after all expenses are paid.

These ratios are normally included whether assessing and analyzing profitability ratios: Return on equity. In performance management, performance assessment, and/or investments analysis, we normally use some of theses ratio along with others ratios and non-financial indicators to measure and assess the performance, financial position of the entity.