Abebe EQA Training document

6: BUSINESS PERFORMANCE
1. Profitability ratio
[A] Gross profit margin=gross
profit/Revenue
[The goal of gross profit minimum 25%]
[B] Net profit margin=Net profit before
tax/Revenue
[The goal of gross profit minimum 25%]
[C] Return on Equity ratio=Net profit
before tax/owners equity
[The return in equity ratio should be
between 15%-40%]
6.1 Financial Performances
2. Liquidity ratio
EQA ,Amhara Building Works Construction Enterprise
[A] Current ratio=Current Asset/Current
Liabilities
[The current ratio should be higher than
1.3 ]
[B] Quick ratio=(Cash+Account
receivable)/Current Liabilities
[The quick ratio should be higher than 1.1 ]
[C] Current Asset to total Asset
ratio=Current Asset /Total Asset
[The Current Asset to total Asset ratio
should be higher than 60%-80% ]