Here is a list of all the relevant metrics taught in this session.

This sheet provides a quick view of the

formulas and uses of the various metrics. Keep it handy to save yourself some time in answering
questions.

Metric Formula Purpose

(Sales revenue - cost To assess the gross profit per

Variable Margin
Operating Margin
Return on Equity
Return on Average
Capital Employed
Return on Capital
Employed
of goods sold) / Sales unit of sales
Operating income / To assess the operating profit
Sales per unit of sales
Net profit / Owners' To assess the return per unit
equity of equity invested
Earnings after taxes
before interest / To assess the return per unit
{(Opening capital of capital employed (when
employed + Closing there is a change in capital
capital employed)/2} employed during a year)
To assess the return per unit
Earnings before of capital employed (when
interest and taxes / capital employed remains
Capital employed constant)

Note: No single metric is sufficient to judge the financial performance of a company.

Different combinations of these metrics are used to analyse the financial health and
performance of a company.

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