Tips on Balance Sheet and Financial Ratios Research

Financial Ratios: Profitability Measures

These financial ratios are generally understood as measures of firm and industry profitability: All ratios are derived from balance sheet data.

1. Return on Assets:
Net Profit /Total Assets

Return on Assets (pre and post tax) is a critical indicator of profitability. Companies which use their assets efficiently will tend to show a ratio higher than the industry norm.