Profitability Ratios

Profitability ratios help to understand the revenue generation ability of a company from the operations. These ratios reflect the efficiency and performance of a company.

Why profitability ratios?

Since all the investors like to gain profit from their investment, they are like to invest in profitable companies. So the profitability ratios help them to understand the profitability compared to different properties like assets, equity, etc.

What are the profitability ratios that we going to discuss here?

• Net Profit Margin
• Return on Investment
• Return on Equity

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