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  • Financial statement ratios

    The financial statement ratios industry benchmarks use data from tax returns to calculate the following ratios:

    Net profit ratio

    (Total business income minus Total expenses)

    divided by

    Total business income

    Gross profit ratio

    (Total business income minus Cost of sales)

    divided by

    Total business income

    Wage to turnover ratio

    Salary and wages paid

    divided by

    Total business income

    Expense to turnover ratio

    Total expenses

    divided by

    Total business income

    The data used to calculate the 2016–17 financial ratios was sourced from 2017 tax returns processed up to 31 October 2018.

    Example: How to use the financial ratios

    Mining company X, an established and profitable company, wants to measure their net profit status against companies comparable with theirs.

    X's details are:

    • Total business income = $701,235
    • Total expenses = $290,845

    X's net profit ratio is calculated as (Total business income minus Total expenses) divided by Total business income, or ($701,235 − $290,845) ÷ $701,235 = 0.59.

    According to the industry benchmarks table, the average and median net profit ratios are 0.6 and 0.66 respectively.

    This means X is comparable with similar mining companies.

    End of example

    Activity statement ratios

    The activity statement ratios industry benchmarks use data from business activity statements to calculate the following ratios:

    Net GST to sales ratio

    (GST on sales minus GST on purchases)

    divided by

    Total sales

    Wages to sales ratio

    Total salary and wages

    divided by

    Total sales

    The data used to calculate the 2017–18 activity statement ratios was sourced from business and instalment activity statements processed up to 31 October 2018.

    Caution when using industry benchmarks

    It is important to recognise that these benchmarks are not definitive and should not be used in isolation.

    For example, there are a range of legitimate reasons why businesses may vary from industry averages and, conversely, why businesses with ratios close to the industry average may have compliance problems or other financial difficulties.

    An average ratio calculated using a large population is generally more reliable than one calculated from a small population. In any population being analysed, there are times when misleading results can be produced – for example, when:

    • amounts listed at tax return labels do not make sense, like when cost of sales or total expenses are zero
    • businesses are too small, like when total income is less than $10,000
    • the ratios for a single entity are exceptional and would distort the calculation of a true industry average.

    In our calculations we exclude records like these to stop them having an unwanted impact on the resulting ratios. For more information on why we exclude some data from the calculation, refer to table 1 below.

    Industry benchmarks detailed tables

    Table 1External Link: How we calculate our industry benchmarks

    This table includes information on the following:

    • the specific labels used in our calculations
    • the thresholds we use in our calculations and why we exclude certain data.
    2016–17 financial ratios

    Table F1External Link: Individual financial ratios, for the 2016–17 income year

    Table F2External Link: Company financial ratios, for the 2016–17 income year

    Table F3External Link: Partnerships financial ratios, for the 2016–17 income year

    Table F4External Link: Trusts financial ratios, for the 2016–17 income year

    Table F5External Link: All entities financial ratios, for the 2016–17 income year

    2016–17 activity statement ratios

    Table A1External Link: Individual activity statement ratios, for the 2017–18 financial year

    Table A2External Link: Company activity statement ratios, for the 2017–18 financial year

    Table A3External Link: Partnership activity statement ratios, for the 2017–18 financial year

    Table A4External Link: Trust activity statement ratios, for the 2017–18 financial year

    Table A5External Link: All entities activity statement ratios, for the 2017–18 financial year

      Last modified: 29 Mar 2019QC 58065