Financial ratios for Business Studies: Profitability ratios

In Business Studies, financial ratios are an important part of the syllabus. This falls under the Finance topic in the NSW HSC Business Studies course.

In this video, we'll take a look at profitability and how we measure profitability using three different financial ratios.

The three profitability measures:
-net profit ratio
-gross profit ratio
-return on equity ratio

We'll also do some practice questions to apply the ratio and understand what it means.

We're not looking at how to improve profitability here -- we'll do that in future videos on Finance strategies.

What is profitability (0:01)
Gross profit ratio (1:50)
Net profit ratio (6:25)
Return on equity (11:30)

This is the HSC Business Studies syllabus:

I've sourced this information from a number of different places. I think the most important sources are:

1. Business Studies in Action (Chapman et al, any edition)

2. This Decoding HSC Business Studies book is outstanding. Fantastic info on answering specific HSC questions, including on Finance.