Key Management Ratios: The Clearest Guide to the Critical Numbers That Drive Your Business, Fourth Edition

Chapter 7. Performance drivers

Operating performance • Operating profit model

	Everything, then, must be assessed in money; for this enables men always to exchange their services, and so makes society possible.
	--ARISTOTLE (384–322 BC)

Operating performance

The two prime ratios that drive return on total assets have been identified:

• margin on sales percentage

• sales to total assets ratio

and these are laid out again for the Example Co. plc in figure 7.1.

Figure 7.1. Margin on sales and sales to total assets ratios applied to data from the Example Co. plc ...