What you’ll learn4 learning objectivesChoose one objective for a focused lesson, or study the complete topic.3.5.1Profitability ratios• Calculate and interpret gross profit margin, profit margin, and return on capital employed (ROCE)• Profitability ratios evaluate efficiency in turning sales, costs, and capital into profitSyllabus objective3.5.2Improving profitability ratios• Evaluate possible strategies to improve profitability ratios• Strategies include raising prices, reducing costs, changing product mix, improving productivity, and better asset useSyllabus objective3.5.3Liquidity ratios• Calculate and interpret current ratio and acid test or quick ratio• Liquidity ratios measure ability to meet short-term liabilitiesSyllabus objective3.5.4Improving liquidity ratios• Evaluate possible strategies to improve liquidity ratios• Strategies include tighter credit control, reducing stock, delaying payments, selling assets, and raising financeSyllabus objective