# Profitability Ratios – Berry‟S Bug Blasters

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Profitability ratios are one of the most frequently used in the financial ration analysis. We will use profitability ratios to determine Berry‟s Bug Blasters‟ bottom line, efficiency, and performance. This is done through analyzing asset turnovers, profit margin, Return on Assets, and Return on common stockholders‟ equity. Asset Ratio: determined by dividing sales revenue by total assets. In 2008, for every dollar of assets owned by Berry‟s Bug Blasters, they sold \$1.68 worth of goods and services. Profit margin: By dividing net income by sales revenue we can determined that the profit margin for Berry‟s Bug Blasters is 6.58% Return on Assets: Asset ratio multiplied by Profit Margin. ROA can help us determine how profitable Berry‟s Bug Blasters is compared to total assets. To analyze ROA, divide Net Income by Total Assets. Berry‟s Bug Blasters had a 25.52% Return on assets. This means they were able to receive \$25.52 profit on every \$100 in assets. Return on Common Stockholders‟ Equity: Determines corporate profitability. Investors can measure how Berry‟s is using the money they invested. To calculate ROE divide Net Profit after Taxes by Stockholder‟s Equity. The calculation determined in 2008 that Berry‟s Bug Blasters had a 3.7% return on Stockholder‟s equity. Calculations Asset Turnovers: Asset turnovers= sales revenue/total assets Asset turnovers= 3,249,580.53/1,932,041.17 Asset Turnovers= 1.68 Profit Margin: = Profitability (net income)/revenue. =493,139.75/ 3,249,580.53 = 6.58% Return on Assets: ROA= Net Income/Total Assets ROA= 493.139.75/1,932,041.17 ROA= 25.52% ROE = Net Profit After Taxes / Stockholders' Equity ROE= 431,811.49/1,625,235.46 ROE=