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A Look at Square’s Profitability Ratio

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Profitability ratio

Square’s (SQ) trailing-12-month gross margin is 39.02% compared to the industry and sector averages of 58% and 20%, respectively. Its five-year average gross margin is 32.46%.

Square’s trailing-12-month operating margin stands at -1.56 compared to 17.06 for the overall industry and 21.81 for the sector. Its net profit margin for the trailing-12-month period is -0.88 compared to the industry and sector averages of 12.49 and 17.17, respectively.

In comparison, the trailing-12-month net profit margins of Square’s peers eBay (EBAY), Baidu (BIDU), Yelp (YELP), and Twitter (TWTR) stand at 21.64, 26.54, 1.67, and 48.66, respectively.

Square’s trailing-12-month EBITDA margin stands at 2.76, while its five-year average stands at 25.15 compared to the industry average of 23.52.

Square’s trailing-12-month pretax margin is -0.81 compared to the industry average of 17.77. Its five-year average margin stands at -10.09 compared to the industry average of 19.41.

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Financial strength

Square’s quick ratio in the recent quarter stood at 1.53 compared to the industry average of 1.90. Its current ratio stands at 1.54, and its long-term debt-to-equity ratio stands at 80.02. Its trailing-12-month interest coverage ratio is 1.58 compared to the industry average of 20.14 and the sector average of 16.12.

Growth rate

Square’s sales from its most recent quarter increased 50.75% from the comparable period last year. The sales growth rate for the industry stands at 11.93%, while it’s 2.02% for the sector. Square’s sales have risen 61.20% over the past five years. The industry and sector growth rates stand at 13.31% and 5.42%, respectively.

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