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How Are Profitability Ratios Used by Different Stakeholders? List One

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Essay

How are profitability ratios used by different stakeholders? List one profitability ratio.


Definitions:

Markup

The surcharge applied to the original cost of items to compensate for overhead expenses and secure earnings.

Plantwide Predetermined Rate

A single overhead rate calculated using the total estimated overhead costs divided by an estimated allocation base for an entire factory or plant.

Machine-Hours

A measure of the time that a machine is in operation, used in costing and operational analysis.

Departmental Predetermined Rates

Overhead allocation rates set in advance for specific departments to allocate indirect costs more accurately.

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