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Function documentationProfitability Analysis Ratios Locate this document in the navigation structure

 

Profitability analysis ratios provide tools that help you understand the profitability of your business.

Features

Profitability ratios include the following:

  • ROA

    Calculates return on assets (ROA), which measures the ability of management to use the total assets of the business to generate profits

    *function ROA(%NETINCOME%,%AVGTOTALASSET%)

    iif(%AVGTOTALASSET%=0,Null,round(%NETINCOME%/%AVGTOTALASSET%,2))

    *endfunction

  • ROE

    Calculates return on equity (ROE), which measures the returns earned on both preferred and common stockholders' investments

    *function ROE(%NETINCOME%,%AVGSTOCKEQT%)

    iif(%AVGSTOCKEQT%=0,Null,round(%NETINCOME%/%AVGSTOCKEQT%,2))

    *endfunction

  • ROCE

    Calculates return on common equity (ROCE), which measures the return on common stockholders' investments only

    *function ROCE(%NETINCOME%,%AVGCOMMONSTOCKEQT%)

    iif(%AVGCOMMONSTOCKEQT%=0,Null,round(%NETINCOME%/%AVGCOMMONSTOCKEQT%,2))

    *endfunction

  • CTS

    Calculates the cost of goods sold to sales (CTS)

    *function CTS(%COSTOFGOODS%,%REVENUE%)

    iif(%REVENUE%=0,Null,round(%COSTOFGOODS%/%REVENUE%,2))

    *endfunction

  • NPM

    Calculates the net profit margin (NPM), also known as the trading profit margin, which measures trading profit relative to sales revenue.

    Example Example

    A trading profit margin of 10% means that every $1.00 of sales revenue generates $0.10 in profit before interest and taxes.

    End of the example.

    Some industries have low margins, which are compensated for by high volumes. Conversely, high margin industries can be low volume. Higher than average net profit margins for the industry can be an indicator of good management. The Net Profit Margin is calculated by Net Profit before Interest & taxes divided by Sales Revenue times 100.

    *function NPM(%NETINCOME%,%REVENUE%)

    iif(%REVENUE%=0,Null,round(%NETINCOME%/%REVENUE%,2))

    *endfunction

  • GPM

    Calculates gross profit margin (GPM)

    *function GPM(%GROSSMARGIN%,%REVENUE%)

    iif(%REVENUE%=0,Null,round(%GROSSMARGIN%/%REVENUE%,2))

    *endfunction

  • SMGAEXPS

    Calculates sales, general, and administrative expense to sales (SMGAEXPS)

    *function SMGAEXPS(%SMEXP%,%GAEXP%,%REVENUE%)

    iif(%REVENUE%=0,Null,round((%SMEXP%+%GAEXP%)/%REVENUE%,2))

    *endfunction

Any software coding and/or code lines / strings ("Code") included in this documentation are only examples and are not intended to be used in a productive system environment. The Code is only intended to better explain and visualize the syntax and phrasing rules of certain coding. SAP does not warrant the correctness and completeness of the Code given herein, and SAP shall not be liable for errors or damages caused by the usage of the Code, except if such damages were caused by SAP intentionally or by its gross negligence.