Profitability measures such as the EBIT margin and ROIC focus on the ability of a firm to earn a sufficient operating profit with reasonable expenses.

Question

Quizplus · Accepted Answer

The statement is true. The EBIT margin (earnings before interest and taxes margin) measures a company's operating profit as a percentage of its revenue, while ROIC (return on invested capital) measures the return a company earns on the capital invested in its operations. Both these measures focus on a firm's profitability by assessing its ability to generate profits relative to its expenses and invested capital.

Profitability Measures Such as the EBIT Margin and ROIC Focus