Profitability refers to the ability of the business to:
A) pay its current and noncurrent liabilities.
B) earn a reasonable amount of income.
C) manage its accounts receivable and inventory.
D) provide owners with dividends.

Question

Quizplus · Accepted Answer

Profitability refers to a company's ability to earn a reasonable amount of income, which is higher than its expenses, including operating costs, taxes, and interest. It's important for a company to earn a profit to sustain its operations and provide a return to its owners, but profitability does not necessarily involve paying off liabilities, managing accounts receivable or inventory, or providing dividends.

Profitability Refers to the Ability of the Business To