Asked by Marisa Belber on May 12, 2024
Verified
All of the following are profitability ratios EXCEPT
A) inventory turnover.
B) return on equity.
C) net profit margin.
D) gross profit margin.
Profitability Ratios
Measures of a company’s overall financial performance by evaluating its ability to generate revenues in excess of expenses.
Inventory Turnover
Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.
Return on Equity
A measure of the profitability of a business in relation to the equity, calculated as net income divided by shareholders' equity, expressing the company's ability to generate profits from its shareholders' investments.
- Identify the relevance of profitability ratios in evaluating a firm’s financial performance.
Verified Answer
Learning Objectives
- Identify the relevance of profitability ratios in evaluating a firm’s financial performance.
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