Income Statement Ratios Sales

In the income statement net profit stays at the bottom line and it is the result of deducting the cost of goods sold operating expenses tax expenses and interest expenses.

Income statement ratios sales. Cost of goods sold of 6 000 000. The calculation of net profit margin is by dividing net profit with total sales revenues. Let us see the example of a vertical analysis of colgate s income statement. In the below snapshot we have divided each income statement line item with net sales for the period between 2007 to 2015.

Gross margin gross profit revenue. Vertical analysis of colgate s income statement. Example 7 assume that xyz is a regular corporation which had 8 000 000 of net sales gross sales minus sales discounts returns and allowances. In this tutorial i ll teach you 7 important income statement ratios that you need to know when analyzing an income statement.

These ratios are widely used by large institutional investors to small retail investors. These ratios are derived from income statements. Profit margin after tax net income after tax net sales. Many businesses are now letting a specialized team handle management from anything to marketing sales to analytics.

Financial ratios are used to compare companies within the same industry. The cost of sales has been in the range of 41 44 historically. Sg a expenses of 1 250 000. The following are the list of 7 income statement s ratios that mostly use.