Which of these is the best measure of an entity's profitability?
A)Profit before tax
B)Profit after tax
C)Earnings before interest and tax
D)There is no one 'best' profit measure;it depends on the requirements of the user

Question

Quizplus · Accepted Answer

Depending on the requirements of the user, different profit measures may be relevant. For example, someone looking at the company's tax efficiency may be interested in profit before tax, while someone interested in the impact of interest payments may prefer earnings before interest and tax. Similarly, some stakeholders may focus on the company's after-tax profitability or return on investment, which makes profit after tax a suitable measure. Therefore, there is no one 'best' measure of profitability.

Which of These Is the Best Measure of an Entity's