Which ratio is considered to be the primary measure of overall profitability as it assesses how effectively the business has used its funds?
A)return on ordinary shareholders' funds.
B)gross profit margin.
C)return on capital employed.
D)operating profit margin.

Question

Quizplus · Accepted Answer

Return on capital employed (ROCE) is considered to be the primary measure of overall profitability as it assesses how effectively the business has used its funds. ROCE measures the return generated on the total capital employed in the business, including both equity and debt. This ratio is important as it shows how well the company is utilizing its assets to generate profits, and whether or not it is generating a return that exceeds the cost of the funds employed.

Which Ratio Is Considered to Be the Primary Measure of Overall