Which of the following is a performance ratio?

The gross profit margin is considered a performance ratio because it measures a company's ability to generate profit relative to its sales revenue. This ratio indicates how efficiently a company is producing and selling its goods, providing insights into the operational performance of the business.

Gross profit margin is calculated by taking gross profit (sales revenue minus cost of goods sold) and dividing it by sales revenue, then multiplying by 100 to express it as a percentage. A higher gross profit margin reflects a more efficient production process and greater pricing power, which is critical for assessing a company's profitability and operational efficiency.

In contrast, the gearing ratio focuses on financial structure and leverage, analyzing the proportion of a company’s capital that comes from debt compared to equity. The current ratio and quick ratio are liquidity ratios, assessing the ability of a company to meet its short-term obligations. While they are important metrics, they do not directly evaluate the performance in terms of profitability and operational efficiency like the gross profit margin does.