Question

Tests of Profitability:

a. compare net earnings with one or more primary activities.
b. evaluate gross revenue against secondary operations.
c. assess employee satisfaction within the organization.
d. measure market share in the industry.

Answer 1

Profitability can be measured by comparing net earnings with primary activities and evaluating gross revenue against secondary operations. To calculate profits, one can compare the total revenue and total cost. The goal of every business is to earn a profit by ensuring that the total revenue exceeds the total cost.

Step-by-step explanation:

Profitability can be measured by comparing net earnings with primary activities and evaluating gross revenue against secondary operations. However, assessing employee satisfaction within the organization and measuring market share in the industry are not direct measures of profitability. To calculate profits, one can compare the total revenue and total cost by subtracting the latter from the former. The goal of every business is to earn a profit by ensuring that the total revenue exceeds the total cost.