Profitability Ratio Calculator

Formula

The formula to calculate the Profitability Ratio (PROFR) is:

\[ PROFR = \frac{GP}{S} \times 100 \]

Where:

$ PROFR $ is the Profitability Ratio (%).
$ GP $ is the gross profit (\$).
$ S $ is the total sales (\$).

What is Profitability Ratio?

The Profitability Ratio is a financial metric used to assess a company's ability to generate profit relative to its revenue. It is expressed as a percentage and helps in evaluating the efficiency of a company in converting sales into actual profit.

Example Calculation

Consider an example where:

Gross Profit (GP): $50,000
Total Sales (S): $200,000

Using the formula to calculate the Profitability Ratio:

\[ PROFR = \frac{50,000}{200,000} \times 100 = 25 \% \]

This means that the profitability ratio for this example is 25%.