The ratios you've provided are all financial metrics used to analyze a company's financial performance and health. They are aimed at evaluating various aspects of the company's operations, efficiency, and profitability. Here are the specific formulas along with a brief explanation for each:
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Pretax Margin Ratio:
\[ \text{Pretax Margin Ratio} = \frac{\text{Net Profit Before Taxes}}{\text{Sales}} \]
This ratio indicates how much profit a company makes before tax expenses, relative to its sales revenue. It helps assess the company's profitability from its core operations. -
Cash Debt Coverage:
\[ \text{Cash Debt Coverage} = \frac{(\text{Cash Flow from Operations} - \text{Dividends})}{\text{Total Debt}} \]
This ratio measures a company's ability to cover its total debt with its operating cash flow, excluding dividends. It gives insights into liquidity and financial health. -
Contribution Margin Ratio:
\[ \text{Contribution Margin Ratio} = \frac{(\text{Sales} - \text{Variable Costs})}{\text{Sales}} = \frac{\text{Contribution Margin}}{\text{Sales}} \]
This ratio indicates the percentage of sales revenue that exceeds total variable costs, contributing to fixed costs and profits. It is useful for understanding the profitability of individual products. -
Gross Profit Margin Ratio:
\[ \text{Gross Profit Margin Ratio} = \frac{\text{Gross Profit}}{\text{Sales}} = \frac{(\text{Sales} - \text{Cost of Goods Sold})}{\text{Sales}} \]
This ratio measures the proportion of money left over from revenues after accounting for the cost of goods sold (COGS). It evaluates a company's financial health and pricing strategy.
These ratios provide insights into different aspects of a company's operational efficiency, cost structures, and pricing strategies. Investors and analysts often use these ratios to assess the company's overall performance and make informed decisions.
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