Which of the following ratios is most useful in indicating a company's profitability?
A) Operating cash flow ratio
B) Profit margin ratio
C) Dividend payout ratio
D) Dividend yield ratio

Question

Quizplus · Accepted Answer

The profit margin ratio is the most useful ratio in indicating a company's profitability as it shows the percentage of revenue that is turned into profit. It is a clear and direct measure of a company's ability to generate profits from its operations. The operating cash flow ratio is more focused on a company's ability to generate cash, while the dividend payout and yield ratios are more focused on its dividend policy.

Which of the Following Ratios Is Most Useful in Indicating