A common measure of profitability is
A) the quick ratio.
B) times-interest-earned ratio.
C) return on common stockholders' equity ratio.
D) debt ratio.

Question

Quizplus · Accepted Answer

The return on common stockholders' equity ratio is a measure of profitability as it indicates how much profit a company is generating from the money invested by its common stockholders. This ratio is calculated by dividing net income by the average common stockholders' equity. The other options listed are measures of liquidity (quick ratio) and solvency (debt ratio) or measures of the ability to meet debt obligations (times-interest-earned ratio), but not profitability.

A Common Measure of Profitability Is