Profitability ratio

Profitability ratio is those ratios—gross profit rate, return on sales, return on total assets, and return on common stockholders' equity—which measure a company's ability to earn a profit.

Definitions

According to College Accounting: A Practical Approach by Slater (13th edition)‎,

Profitability ratios. Those ratios—gross profit rate, return on sales, return on total assets, and return on common stockholders' equity—which measure a company's ability to earn a profit.

According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),

Profitability ratios. Ratios that show the combined effects of liquidity, asset management, and debt on operations.

According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),

Profitability ratio. A group of ratios that show the combined effects of liquidity, asset management, and debt on operating results.

Related concepts

• Accounting (alternatively known as accountancy) is management of financial data, information, and knowledge about financial transactions of legal entities. Accountancy tends to include bookkeeping and, depending on a particilar enterprise, may also include quatitative analysis of financial data in the bookkeeping system and/or business intelligence.

Related lectures

• Principles of Accounting.