The type of ratio that allows the analyst to measure the ability of the firm to earn an adequate return on sales,total assets,and invested capital is:

Question

Quizplus · Accepted Answer

Profitability ratios are designed to measure the ability of the firm to generate profits relative to a specific level of sales, assets, or equity. These ratios help in assessing the firm's overall financial performance and efficiency in generating profits from its core operations. Profitability ratios include return on sales (ROS), return on assets (ROA), and return on invested capital (ROIC) ratios, which allow the analyst to measure the firm's ability to earn an adequate return on sales, total assets, and invested capital, respectively. Hence, option B is the correct choice.

The Type of Ratio That Allows the Analyst to Measure