Question

Yennex Inc., a textile company, planned to sell its stock products in two months' time. The company was able to sell those products within a month's time. Therefore, it was able to sell double the estimated amount in a year. Given the scenario, which of the following ratio analyses is most likely to have been analyzed by Yennex Inc. to achieve this success

Answer 1

Profitability ratios

Step-by-step explanation:

Profitability ratios are considered financial metrics and are mainly used by investors and analyst when assessing an organization's ability to generate profit relative to revenue, operating costs, and equity of shareholders within a period of time. The ratio is meant to visualize how a company best uses its asset for the purpose of producing value and profit to shareholders. A higher ratio would mean that the business is doing well and generating profits, revenues and cash flow.

The Formula for calculating profitability ratio: Net Profit ÷ Sales × 100.

Net Profit = Gross Profit + Indirect Income – Indirect Expenses