The ability of a business to earn a reasonable amount of income is referred to as the factor of:
A)leverage.
B)profitability.
C)wealth.
D)solvency.

Question

Quizplus · Accepted Answer

Profitability refers to the ability of a business to generate income through its operations. This factor is essential as it ultimately determines the success or failure of a business. Leverage refers to the use of debt financing to finance a business's operations. Wealth refers to the total value of a business's assets. Solvency refers to a business's ability to meet its long-term financial obligations. While all of these factors are important, profitability is the most relevant in terms of a business's ability to generate income.

The Ability of a Business to Earn a Reasonable Amount