Profitability Ratios – Meaning & Types

Profitability ratios are financial ratios used to measure the ability of a company to generate profit. These ratios can also be used to compare a company’s performance against other comapnies in same industry.

 

Types of profitability ratios:

The below are the important types of profitability ratios:

  1. Gross profit margin,
  2. Operating profit margin,
  3. Net profit margin,
  4. Return on investment (ROI),
  5. Return on assets and
  6. Return on equity