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Sir, we have learnt that the Net Profit ratio is calculated as:
(Net Profit / Sales revenue) x 100BUT in Paper PM it is different and calculated as:
(Profit before interest & tax / Sales revenue) x 100Why is that so?
All the other ratios remain the same in paper PM [correct?]
Although in financial accounting net profit usually means the profit after interest and tax, when looking at management performance it means the net operating profit i.e. the profit from operations which is before interest and tax.
I do make this clear in my free lectures.
The other ratios are the same, but I do work through them in my lectures.
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