Which of these is the best measure of an entity's profitability?
A) Pro forma earnings.
B) Profit before tax.
C) Profit post material items.
D) There is no one 'best' profit measure; it depends on the requirements of the user.

Question

Quizplus · Accepted Answer

Profitability can be measured in different ways based on the needs of the user. Pro forma earnings is a non-GAAP measure that excludes certain items, making it more subjective. Profit before tax is a traditional measure, but it could vary depending on the tax structure. Profit post material items is a measure that excludes significant one-off items, but it could still depend on what is considered material. Ultimately, the best measure of profitability depends on the specific requirements of the user.

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