A crucial metric in assessing a company's core operating performance by excluding the effects of finance and tax expenses from operating profit calculations.
The degree to which the net profit of an organization reflects accurately its operating performance; it is particularly important to ensure that creative accounting has not taken place and that no events have occurred to distort the profit figure.
Ratio analysis is the use of accounting ratios to evaluate a company's operating performance and financial stability. Examples include return on capital employed and gross profit percentage for profitability assessment. Additionally, the liquid ratio examines solvency, while gearing ratios evaluate the company's financial structure.
