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

Question

Quizplus · Accepted Answer

The operating margin percentage is the ratio between a company's operating income and its net sales or revenue. This ratio indicates how efficient a company is at generating profits from its operations. A higher operating margin percentage indicates that a company is generating more profits from each dollar of sales, which is a good indicator of profitability. The other ratios listed (operating cash flow ratio, dividend payout ratio, and dividend yield ratio) are useful for different purposes but are not as directly related to a company's profitability.

Which of the Following Ratios Is Most Useful in Indicating