Profit Before Tax to Sales Ratio

Profit Before Tax to Sales Ratio Profit before tax divided by net sales and the sum multiplied by a hundred. This is a useful indicator of how efficiently the company is being run. Compared to pervious years, if the ratio falls, the company’s costs must have escalated or its sales dropped. If the ratio is higher, it means that either the company has reduced its costs relative to sales, or that the sales have picked up.

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