Profitability ratios are financial ratios used to measure the ability of a company to generate profit. These ratios can also be used to compare a company’s performance against other comapnies in same industry.
Types of profitability ratios:
The below are the important types of profitability ratios:
- Gross profit margin,
- Operating profit margin,
- Net profit margin,
- Return on investment (ROI),
- Return on assets and
- Return on equity