Patent ID: 6850897

Claim:
A method for analyzing the use of profitability of an organization comprising the steps of: performing a first calculation to determine a relationship between a change in revenue growth and profitability using the equation: ((BE/BA)×((CR/PR)−1))/((PR/BA)×((1+((CR/PR)−1)))). whereby BE represents the beginning total equity of the fiscal period to be analyzed; BA represents the beginning total assets (or total liabilities plus total equity) of the fiscal period to be analyzed; CR represents the total revenues of the fiscal period to be analyzed; and PR represents the total revenues of the fiscal period immediately preceding the fiscal period to be analyzed; performing a second calculation to determine a relationship between a change in operating leverage and profitability; performing a third calculation to determine a relationship between a change in equity financing and profitability; and summing said first, second and third calculations to yield a profitability ratio.