Which ratios are designed to evaluate a firm's ability to generate revenues in excess of operating costs and other expenses?
A)Activity
B)Liquidity
C)Profitability
D)Debt

Question

Quizplus · Accepted Answer

Profitability ratios are specifically designed to assess a firm's ability to generate earnings relative to its revenue, operating costs, and other expenses. These ratios, such as net profit margin, return on assets (ROA), and return on equity (ROE), provide insights into how efficiently a company is generating profit from its operations.

Which Ratios Are Designed to Evaluate a Firm's Ability to Generate