OPERATING PROFIT TO SALES Definition

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OPERATING PROFIT TO SALES is a useful ratio when evaluating value of a firm. It discounts the effect of varying tax rates and benefits to give a more accurate indication of the return associated with the firm. Operating Profit (EBITDA) / Net Revenues.

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PROFIT AFTER TAX (PAT) is the net profit earned by the company after deducting all expenses like interest, depreciation and tax. PAT can be fully retained by a company to be used in the business. Dividends, if declared, are paid to the share holders from this residue.

FUNDS EMPLOYED, normally, is the average of Net Working Capital plus Fixed Assets held at the beginning and end of the financial year.

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