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Module 4 of 5 in Financial literacy and accounting

Profit levels, margins and earnings per share

The measures analysts quote most often, how each is calculated from the statements, and the questions each one answers.

Lessons
3 ready
Time
About 19 minutes
Module test
10 questions from a bank of 33, pass mark 80%

3 lessons in this module. Progress is saved in your browser as you go.

0 of 3
Start with: Operating profit, EBITDA and net profit

Raw numbers become useful when they are compared. This module covers the measures built from the income statement: the different levels of profit, the margins that turn them into "profit per ₹100 of sales", and earnings per share, which links profit to a single share.

By the end of this module you should be able to

  • Distinguish EBITDA, operating profit, profit before tax and net profit, and explain what each includes.
  • Calculate gross, operating and net margins and explain what changes in them can mean.
  • Calculate basic and diluted earnings per share and explain why share count changes matter.

Lessons in order

  1. Operating profit, EBITDA and net profit7 min
  2. Profit margins and what they reveal6 min
  3. Earnings per share6 min
  4. Module test: Profit levels, margins and earnings per share10 questions

Module test

10 questions, chosen at random from a bank of 33 questions and balanced across this module's learning goals and difficulty levels. Every question comes with an explanation. You need 80% to pass, and you can retake it as often as you like with a fresh set of questions.

Go to the module test Practise first

This module builds on

  • The income statement: Every level of profit in this lesson is read from, or calculated from, the income statement.

Key terms in this module