Which of the following ratios would be the best measure of profitability?
A) Current ratio
B) Debt-to-equity ratio
C) Times-interest-earned ratio
D) Return on assets

Question

Quizplus · Accepted Answer

Return on assets (ROA) measures the amount of profit a company earns relative to its assets. It is a comprehensive profitability ratio that takes into account both revenue and expenses, as well as how efficiently a company is using its assets to generate profits. In contrast, the other three ratios listed are all liquidity or solvency ratios that focus on a company's ability to meet its financial obligations rather than its profitability.

Which of the Following Ratios Would Be the Best Measure