Accounting Profitability Margin Ratios

Accounting Profitability Margin Ratios

The Profitability Margin Ratios allow users of the financial statements to assess the profits being generated. Within this video, Saket outlines the benefits of using these ratios, and how we calculate; gross profit margin, EBITDA margin, EBIT margin, and the net profit margin.
Overview

The profitability margin ratios are used to measure profitability relative to the revenue. The ratios help users of the financial statements assess how much profits are generated from use of the resources and the value that is added to the shareholders. There are four profitability margin ratios which can be determined from the financial statements of corporates: the gross profit margin, the EBITDA margin, the EBIT margin and the Net profit margin.

Key learning objectives:

  • What are the benefits of profitability margin ratios?

  • How are the different profitability margin ratios calculated?

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Summary
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Expert
Saket Modi

Saket Modi

Saket is a financial trainer and consultant based out of London. He specialises in advanced accounting, financial reporting and financial analysis, particularly with regards to International Financial Reporting Standards (IFRS), International Public Sector Accounting Standards (IPSAS) and Financial instruments.

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