Profitability ratios

Profitability ratios play a vital role in the identification of market survival of the company in the current scenario, especially in comparison to their competitors. This ratio provides insight into the process by which a company manages its current resources (Lischevski and Voronkova, 2012).

Gross profit margin ratio examines the financial health of the company by presenting the overall additional expenses and future savings of the company. This margin is identified by the ratio of revenue made excluding the cost of goods sold by the overall revenue (Gitman and McDaniel, 2008, pg 393).