=1,000,000/5,000,000 =20% or 0.20 , which means that for every INR of assets, the company generates 20 cents of profit. It shows how efficiently a company utilizes its resources to generate earnings. Higher the number better the operational efficiency. The key point to note here is that the number should’nt be very high as this could mean temporary gain by sale of its assets, aggressive accounting practice, over leverage, one time adjustment
