Although several different measures of profitability exist, many authorities in the measurement of profitability argue that which of the following is the best measurement because "it focuses on the true operating performance of the company"?
A) Return on invested capital
B) Net profit margin
C) Return on equity
D) Capital turnover
E) Return on sales

Question

Quizplus · Accepted Answer

Return on invested capital is considered the best measurement of profitability as it takes into account both returns generated from operating activities and the capital invested to generate those returns. This provides a more accurate picture of the company's true operating performance.

Although Several Different Measures of Profitability Exist, Many Authorities in the Measurement