Financial Ratio Revision to reinforce my knowledge

1. Gross Profit Margin - this is the gross profit amount divided by the revenue amount. Gross profit is the amount left after deducting the sales from the cost of goods. The lesser the gross profit margin, the harder the business. Beware.

2. Return on Equity - is the net profit after tax, divided by the total equity in the balance sheet. Higher ROE means the company can generate more money from its capital. e.g ROE of 20% means for every $1 deployed, you get $0.20 from it. Today SMART INVESTOR recommend to buy SGX stock as the company provide high ROE.

3. Debt-Equity Ratio - is the gross debt (short and long term) divided by the total equity. Prudent ratio is recommended to below 50%.