Final answer:
The universally accepted measure of profitability is Return on Investment (ROI). It is widely used to assess the potential returns from investments relative to their costs. Other measures like Return on Liabilities or Return on Retained Earnings are not universally recognized as standard measures of profitability.
Step-by-step explanation:
The universally accepted measure of profitability among the options provided is Return on Investment (ROI). This metric calculates the efficiency of an investment by comparing the gain (or loss) from an investment relative to its cost. It's a standard measure that investors and managers use to gauge the potential returns from different investments or to compare the efficiency of several investments. Return on liabilities and return on retained earnings are not standard measures of profitability employed universally.
Other Measures of Financial Performance
- Energy Returned on Energy Invested (EROEI) - A specific measure used to assess the profitability of energy sources in terms of energy output versus input.
- Return and Risk - When evaluating investments, investors must consider the expected rate of return along with the associated risks and liquidity.
- Sources of Capital - Businesses can acquire financial capital through early-stage investors, reinvesting profits, borrowing through banks or bonds, and selling stock, each with different implications for profitability and risk.