Profitability ratios measure:
A)how efficiently a firm uses its assets to generate sales.
B)how much debt the firm is using relative to other sources of financing.
C)how much operating income or net income a firm is able to generate relative to its assets,equity,and sales.
D)the speed with which a company can turn its short-term assets into cash to pay off its short-term debts.
E)the performance of the firm relative to others on a per-share basis.

Question

Quizplus · Accepted Answer

Profitability ratios are financial metrics used to assess a business's ability to generate earnings compared to its expenses and other relevant costs incurred during a specific period. These ratios, such as return on assets (ROA), return on equity (ROE), and profit margin, focus on a company's financial performance and efficiency in generating profits from its assets, equity, and sales.

Profitability Ratios Measure