Profitability Ratio

What is the Profitability Ratio?

A Profitability Ratio is a financial ratio that measures a company’s profitability. It indicates how much profit a company generates in relation to its turnover, assets, or investments. There are different types of Profitability Ratios, such as Gross Profit Margin, Operating Profit Margin, Net Profit Margin, and Return on Investment (ROI). These ratios are used to measure a company’s performance and compare it with competitors and the industry as a whole. A higher Profitability Ratio indicates that a company is more efficient and profitable, while a lower ratio may indicate problems with cost control, competition, or changes in the market.