________ ratios are designed to indicate how successful a firm is in terms of its earnings as compared with its assets or owners' equity.
A)Activity
B)Liquidity
C)Profitability
D)Debt

Question

Quizplus · Accepted Answer

Profitability ratios are used to evaluate a company's financial performance and ability to generate earnings in relation to its assets or shareholders' equity. These ratios include return on assets (ROA), return on equity (ROE), gross profit margin, net profit margin, and earnings per share (EPS). Activity ratios are designed to measure a company's efficiency in managing its assets and resources, while liquidity ratios are used to determine a company's ability to meet short-term obligations. Debt ratios, on the other hand, assess a company's ability to manage its debt levels and repay its creditors.

________ Ratios Are Designed to Indicate How Successful a Firm