Accounting (AS)·Ratios & interpretation · NSSCAS 4.1.1
Profitability ratios
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A profit of N$50 000 sounds nice — but is it actually good? Only a ratio can tell you. In this lesson you meet the four families of accounting ratios and master the six profitability ratios, from mark-up to return on capital employed. Ratio questions appear in both Paper 1 and Paper 2, and the formulas here come straight from the syllabus annexe — learn them exactly.
What you'll learn in this lesson
By the end you should be able to (NSSCAS Accounting (AS) 4.1.1):
- classify accounting ratios into: profitability, liquidity, efficiency, investment
- calculate and analyse profitability ratios: mark up, gross margin, profit margin, expenses to revenue, operating expenses to revenue (companies), return on capital employed
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