## PROFITABILITY RATIOS

Measurements used to assess the relative profitability of a company. Some common profitability ratios and the formulas for calculating them are as follows: * Book value per share = Total common equity divided by the number of common shares outstanding.

* Dividends per share = Total dividends paid to common shareholders divided by the number of common shares outstanding.

* Earnings per share = The common shareholders' portion of net income for a given period divided by the number of common shares outstanding.

* Gross profit percentage = Total cost of sales for a given period divided by total sales for that period. * Net profit percentage = Net income for a given period divided by total sales for that period.

* Operating profit percentage = Earnings before interest and taxes for a given period divided by total sales for that period. * Return on common equity = Net income for a given period less dividends, divided by shareholders' equity less preferred stock.

* Return on investment = Net income divided by total assets.