Profit and loss statement
Sales margin shows the profitability of the sales. The financial expenses are neglected in the sales margin to understand the profitability of the products/services sold.
Sales margin = EBIT / Sales
Depreciation and Amortization
Is the real cost for an asset that is periodically distributed over the estimated lifetime of that asset. Amortization is similar to depreciation but it refers to intangible assets.
The measurement shows a companies ability to serve their borrowers.
Interest cover = EBIT / Interest
Relationship between the balance sheet and the profit and loss statement:
Profit and loss Balance sheet
* EBIT * TA Results in Return on total assets (ROTA)
* EBT * CE
* EAT * NW Results in Return on Equity (ROE)
Source: Ciaran Walsh, Key Management Ratios 4th edition, 2008, Harlow (link to latest edition)