There are the ratios which are used to measure profitability of business
They are calculated taking into account Profit and Loss Account of business
| S.no. | Ratio Name | Formula | Ideal Ratio | What is better | Remarks |
| 1 | Gross Profit Ratio | Gross Profit / Net Sales | Depend upon Business to Business | Higher the better | Net Sales = Sales Direct Income - Sales Return |
| 2 | Net Profit Ratio | Net Profit / Net Sales | Depend upon Business to Business | Higher the better |
Net Profit can be PBT or PAT …. Net Sales = Sales Direct Income - Sales Return |
| 3 | Operating Profit Ratio | Operating Profit before interest / Net Sales | Depend upon Business to Business | Higher the better | Operating Profit = EBIT(PROFIT+INTEREST EXP + TAX - INT INCOME) |
