00:01
So let's start with profitability and let's find what ratios could help someone understand a company's profitability.
00:15
The first one is profit margin, which is net income over net sales.
00:38
And this ratio measures net income generated by each dollar of sales.
00:43
Another profitability ratio that's helpful is return on assets.
00:50
I'm often noted as roi.
00:54
Sorry, that would be return on income, so roa, return on assets.
01:01
And that is net income over average total assets.
01:22
And that one is measuring over all profitability of assets.
01:31
And those are two good profitability ratios to start with to talk to someone about.
01:37
The next one is asset efficiency.
01:39
So i am going to erase all of this.
01:52
So next one is asset efficiency.
01:57
And it's just trying to figure out how well assets are being utilized in a company.
02:06
And a good ratio for that would be asset turnover, which is net sales.
02:40
Over average total assets, which is similar to the ratio i just talked about for profitability, but this is talking about net sales instead of net income.
02:53
So average total assets, sorry...
