Question

Which of these are profitability ratios? (check all that apply.) multiple select question.

O return on equity earnings per share times
O interest earned inventory turnover
O receivables turnover
O fixed asset turnover

Answer 1

Profitability ratios measure a company's ability to generate earnings, with return on equity and earnings per share being the correct options to check from the list provided. option a and b is correct.

Step-by-step explanation:

Profitability ratios are key financial metrics used to assess a business's ability to generate earnings relative to its revenue, operating costs, balance sheet assets, or shareholders' equity during a specific period of time. These ratios provide insights into the financial health and efficiency of a company and are of particular interest to investors and management.

The profitability ratios from the list provided are return on equity and earnings per share. Return on equity (ROE) measures how effectively a company is using its equity to generate profit, while earnings per share (EPS) provides insight into the portion of a company's profit allocated to each share of stock. Therefore, the correct options to check would be return on equity and earnings per share.

The other metrics mentioned, such as inventory turnover, receivables turnover, and fixed asset turnover, are considered efficiency ratios, which measure how well a company uses its assets to generate sales rather than directly measuring profitability.