abhishreshthaa
Abhijeet S
NET PROFIT RATIO
This ratio measures the relationship between net profit and net sales.
Objectives:- The main objective of computing this ratio is to determine the overall profitability.
Formula:-
Net Profit Ratio = Net Profit x 100
Net Sales
Significance:-
This ratio helps in determining the efficiency with which affairs of the businesses are being managed.
An increase in the ratio over the previous period indicates improvement in the operational efficiency of the business provided the gross profit ratio is constant.
The ratio is thus an effective measure to check the profitability of the business.
This ratio measures the relationship between net profit and net sales.
Objectives:- The main objective of computing this ratio is to determine the overall profitability.
Formula:-
Net Profit Ratio = Net Profit x 100
Net Sales
Significance:-
This ratio helps in determining the efficiency with which affairs of the businesses are being managed.
An increase in the ratio over the previous period indicates improvement in the operational efficiency of the business provided the gross profit ratio is constant.
The ratio is thus an effective measure to check the profitability of the business.