Answer:
profit margin
Step-by-step explanation:
There are two main earnings to sale ratios:
- Profit margin that is calculated by dividing net profit by total sales. Generally a 5% ratio is considered low, a 10% ratio is considered average, and a 20% ratio is considered high.
- EBITDA to sales ratio is calculated by dividing earnings before interest, tax, depreciation and amortization (EBITDA) by total sales. It shows the ratio of earnings after operating expenses and it excludes the capital structure of the company. The use of this ratio is more limited than profit margin, but it can show us important information by excluding non-controllable factors like taxes, interests, etc.