Operational Metrics

Financial Ratio


Gross Profit

The gross margin is a financial ratio, which helps assess the profitability of a business and also its operational efficiency. Indeed, as gross margins take into account the cost of goods sold (the cost incurred to deliver the software to the customer) it’s a measure to assess the value of a business.

Operating Profit


Profit Margin

The profit margin is a profitability financial ratio, given by the net income divided by the net sales, and multiplied by a hundred. That is expressed as a percentage. That is a key profitability measure as combined with other financial metrics, it helps assess the overall viability of a business model.

Inventory Turnover


Quick Ratio


Key Highlights

  • Gross Profit Margin: The gross profit margin is a financial ratio used to evaluate a business’s profitability and operational efficiency. It takes into account the cost of goods sold, which represents the expenses incurred in producing and delivering a product or service to customers. By calculating the gross profit margin, businesses can gauge their value proposition and efficiency in managing production costs.
  • Operating Profit: Operating profit, also known as operating income or operating earnings, is a financial metric that represents the profit a company generates from its core operations before considering interest and taxes. It reflects the company’s ability to manage its operating expenses and generate profits solely from its core business activities.
  • Profit Margin: The profit margin is a fundamental profitability ratio calculated by dividing net income by net sales and multiplying by 100 to express it as a percentage. This ratio provides insights into how effectively a company converts its sales revenue into profits. When combined with other financial metrics, the profit margin helps assess the overall sustainability of a business model.
  • Inventory Turnover: Inventory turnover is a financial ratio that measures the efficiency with which a company manages its inventory. It’s calculated by dividing the cost of goods sold by the average inventory value during a specific period. A high inventory turnover ratio suggests that a company is effectively selling its inventory and restocking efficiently, while a low ratio might indicate excess inventory or slow sales.
  • Quick Ratio: The quick ratio, also known as the acid-test ratio, is a financial ratio that evaluates a company’s short-term liquidity and ability to meet immediate financial obligations. It’s calculated by dividing the sum of cash, cash equivalents, marketable securities, and accounts receivable by current liabilities. The quick ratio excludes inventory from the calculation, providing a more conservative measure of liquidity.

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