Finance Calc Kit

Ratio	Period A	Period B	Change
Return on assets (ROA) Net income / Total assets	20.00%	---	---
Return on equity (ROE) Net income / Equity	33.33%	---	---
Gross profit margin Gross profit / Sales	50.00%	---	---
Operating profit margin Operating profit / Sales	30.00%	---	---
Net profit margin Net income / Sales	25.00%	---	---
Earnings per share (EPS) Net income / Shares	$10.00	---	---
Price-to-earnings (P/E) Market price / EPS	2.50x	---	---

Profitability ratios for financial analysis

Profitability ratios measure how efficiently a company converts revenue and assets into earnings. Analysts use return on assets (ROA), return on equity (ROE), profit margins, earnings per share (EPS), and price-to-earnings (P/E) to compare performance across periods, peers, and industries.

This calculator computes all major profitability ratios for Period A and an optional Period B, with percentage change between periods. Drill into per-share metrics with the earnings per share calculator and valuation multiples with the price-to-earnings calculator. For bottom-line margin analysis, see the net profit margin calculator. To isolate ROA with DuPont decomposition, use the return on assets calculator, and to model dividend reinvestment policy with sustainable growth, try the retention ratio calculator.

Return on assets and return on equity

\text{ROA} = \frac{\text{Net Income}}{\text{Total Assets}} \times 100

\text{ROE} = \frac{\text{Net Income}}{\text{Shareholder Equity}} \times 100

ROA shows how productively the firm uses its asset base. ROE measures return to common shareholders after leverage. Higher ROE with stable or improving ROA often signals efficient operations without excessive risk.

Profit margin ratios

\text{Gross Profit Margin} = \frac{\text{Gross Profit}}{\text{Sales}} \times 100

\text{Operating Profit Margin} = \frac{\text{Operating Profit}}{\text{Sales}} \times 100

\text{Net Profit Margin} = \frac{\text{Net Income}}{\text{Sales}} \times 100

Gross margin reflects pricing power and production efficiency. Operating margin captures core business profitability before interest and taxes. Net margin is the bottom-line share of each sales dollar after all expenses.

EPS and P/E ratio

\text{EPS} = \frac{\text{Net Income}}{\text{Shares Outstanding}}

\text{P/E Ratio} = \frac{\text{Market Price}}{\text{EPS}}

EPS translates net income into per-share earnings for public companies. P/E compares the stock price to those earnings, helping investors assess whether shares look expensive or cheap relative to current profits.

Worked example (Period A)

Given net income of $100,000, total assets of $500,000, equity of $300,000, gross profit of $200,000, sales of $400,000, operating profit of $120,000, 10,000 shares outstanding, and a market price of $25:

ROA = ($100,000 / $500,000) × 100 = 20%
ROE = ($100,000 / $300,000) × 100 = 33.33%
Gross profit margin = ($200,000 / $400,000) × 100 = 50%
Operating profit margin = ($120,000 / $400,000) × 100 = 30%
Net profit margin = ($100,000 / $400,000) × 100 = 25%
EPS = $100,000 / 10,000 = $10.00
P/E = $25 / $10 = 2.5x

Enter optional Period B figures to see side-by-side comparison and percentage change for each ratio. Leave Period B blank (zero) when you only need single-period analysis.

Frequently asked questions

Which profitability ratio matters most?

It depends on context. Investors often focus on ROE and net margin. Creditors watch ROA and operating margin. Compare several ratios together rather than relying on a single metric.

Should I use average assets or ending balances?

Annual reports often use ending balance sheet figures for simplicity. For more accuracy across periods with large asset changes, average total assets and average equity are preferred.

Why is Period B optional?

Period B fields default to zero. Fill them in when you want year-over-year or quarter-over-quarter comparison. Leave them at zero for single-period ratio analysis.

How is percentage change calculated?

Change equals ((Period B value - Period A value) / |Period A value|) × 100. When Period A is zero or Period B is missing, change shows as unavailable.

Are the calculations stored on a server?

No. All math runs locally in your browser. URL parameters preserve your inputs for sharing.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.