Profitability measures are intended to indicate an entity's ability to earn income by operating efficiently.

Question

Quizplus · Accepted Answer

Profitability measures, such as return on investment and net profit margin, are used to assess how efficiently a company is generating profit from its operations. Therefore, profitability measures are indeed intended to indicate an entity's ability to earn income by operating efficiently.

Profitability Measures Are Intended to Indicate an Entity's Ability to Earn