Profitability may be defined as:
A)The ability to pay the debts of the company as they become due.
B)The ability to increase retained earnings.
C)Distributing dividends out of retained earnings.
D)Having excess cash.

Question

Quizplus · Accepted Answer

Profitability refers to the ability of a company to generate a profit, which in turn increases the retained earnings. Option A refers to liquidity, Option C refers to dividend policy, and Option D refers to cash management.

Profitability May Be Defined As