Which of the following best describes what a profitability ratio is?
A)It shows the relative amount of funds in the business supplied by creditors and shareholders.
B)It indicates a company's ability to pay short-term debts.
C)It indicates management's ability to generate a financial return on sales or investment.
D)It shows the profit margins for the last six months.
E)It indicates the future profits from the current customer base.

Question

Quizplus · Accepted Answer

There are three categories of financial ratios: liquidity, leverage, and profitability. Profitability ratios indicate management's ability to generate a financial return on sales or investment.

Which of the Following Best Describes What a Profitability Ratio