Which of the following ratios would be considered useful in assessing operating profitability?
A) Debt/Equity ratio
B) Acid test ratio
C) Gross profit margin
D) Return on equity

Question

Quizplus · Accepted Answer

Gross profit margin is a ratio that measures the profitability of a company's sales after deducting the cost of goods sold. It is a useful indicator of a company's operating profitability as it shows how efficiently a company is producing and selling its products or services. The debt/equity ratio and return on equity, on the other hand, are measures of a company's financing and investment activities, while the acid test ratio measures a company's short-term liquidity.

Which of the Following Ratios Would Be Considered Useful in Assessing