Formula reference—Profitability ratios

Gross profit margin = gross profit ÷ revenue × 100. Operating profit margin = operating profit ÷ revenue × 100. ROCE = operating profit ÷ capital employed × 100.

Write the formula and definitions first, then compare with prior periods, competitors and the business model. A ratio is a signal, not an explanation.

If gross profit is 40 and revenue 200, gross margin is 20%; if operating profit is 20, operating margin is 10%. The gap invites investigation of overheads.

Do not compare ratios with different accounting definitions or treat a higher percentage as automatically better.