The gross profit margin (GPM) is calculated by using the formula:
(Gross profit ÷ Sales revenue) × 100.

ROCE stands for Rate of Capital Expenditure.

The profit margin is calculated by using the formula:
(Profit ÷ Sales revenue) × 100.

Sales turnover is an example of a profitability ratio.

Raising the price of products sold in highly competitive markets does not improve the gross profit margin (GPM) for the business.

The return on financial investments can be analysed by using profitability ratio analysis.

Adopting aggressive promotional strategies that persuade more customers to buy a firm's products can help to improve its gross profit margin (GPM).

The current ratio is calculated by using the formula:
Current liabilities ÷ Current assets.

A firm’s financial performance compared with its competitors can be analysed using profitability and liquidity ratios.

The current ratio measures a firm’s liquid assets compared to its current (or short-term) liabilities.

Falling raw material prices that result in lower cost of sales (COS) does not improve the gross profit margin (GPM) of a business.

Liquidity ratios calculate how easily a business can pay off its short term debts by using its current assets.

The acid test ratio differs from the current ratio as it excludes the value of stocks which cannot be quickly turned into cash.

Return on capital employed (ROCE), gross profit margin (GPM), and profit margin are all examples of profitability ratios.

The profit margin shows how efficiently a business can turn profits into cash.

Introducing new products with a higher profit margin would improve the gross profit margin (GPM) of a business.

The higher the current ratio, the more money is tied up in liquid resources.

The ROCE ratio measures the financial performance of a business compared with the amount of capital invested in the business.

The profit margin shows what proportion of profits are being distributed to shareholders.