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Profitability Ratios






Cost of Goods Sold = Sales – Gross Profit

Operating Expenses = All the expenses debited in the profit & Loss A/c

except financial expenses i.e., Administrative

Expenses, Selling & Distribution Expenses,

Financial Expenses.

Financial expenses may or may not include the operating expenses.



Return : Net profit

Capital employed : Shareholders fund + long term liabilities


Fixed assets + Current Assets – Current Liabilities



Operating Profit = Net Profit + Non-Operating Expenses-Non Operating Income


[Return = PAT]