Which of the following are the Profitability Ratios:
(A) Debt Equity Ratio
(B) Return on Investment
(C) Price Earning Ratio
(D) Earning per share
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (B), (C) and (D) only
Profitability ratios measure the earning capacity of the business; solvency ratios measure its ability to meet its long-term debts.
(A) Debt Equity Ratio — False. It compares long-term debt with shareholders’ funds, so it is a solvency ratio.
(B) Return on Investment — True. Profit earned on the capital employed.
(C) Price Earning Ratio — True. Market price of a share compared with its earnings.
(D) Earning per share — True. Profit available to each equity share.
NCERT (2026-27 edition):
|
