Profitability ratios are used to determine whether or not a ________.
A)company's stock is a good investment
B)company can earn a satisfactory rate of return
C)company can pay its bills on time
D)company can survive over a long period of time

Question

Quizplus · Accepted Answer

Profitability ratios are used to assess a company's ability to generate earnings and earn a satisfactory return on investment for its shareholders. They are not necessarily indicative of a company's ability to pay bills on time or survive over a long period of time, but rather its profitability potential. Therefore, the best choice is B.

Profitability Ratios Are Used to Determine Whether or Not a ________