Profitability ratios allow one to measure the ability of the firm to earn an adequate return on sales, total assets, and invested capital.

Question

Quizplus · Accepted Answer

Profitability ratios are financial ratios used to measure a company's ability to generate earnings relative to its revenue, assets, and capital. Therefore, it is true that profitability ratios allow one to measure the ability of the firm to earn an adequate return on sales, total assets, and invested capital.

Profitability Ratios Allow One to Measure the Ability of the Firm