Profitability ratios gross profit margin ratio

The gross profit margin is found by dividing the gross profits by the net sales, and the result is expressed as a percentage. This ratio is an indication of the effectiveness of a company s pricing, purchasing, and production policies. 

Since an inherent goal of any business is to be profitable, we can view profitability ratios as measures of overall success in the daily operations of a business. More specifically, profitability ratios provide a method to measure the overall financial success of a company. Examining profitability ratios allows managers to assess the company s level of success in generating profits. The most commonly used profitability ratios are the gross profit margin and the net profit margin. 

By considering the cost of goods sold, this ratio provides information on the company s ability to generate gross profits. Higher gross profit margin ratios are desirable because they indicate the availability of funds for the company s other expenses. 

This paper focuses on C2C and four other finance performance metrics revenue change rate (%), profit margin (%, net and gross), ROA (%), and current ratio. With the data from the selected industries, a comparison of the C2C of each industry has been conducted. This was then the correlation analysis of the C2C and finance performance metrics to see whether there is a positive or negative relationship between them. 

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