Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

Identity the Ratio which helps in the analysis of profit in relation to revenue from operations or funds.

Options:

Solvency Ratio

Liquidity Ratio

Profitability Ratios

Activity Ratio

Correct Answer:

Profitability Ratios

Explanation:

The correct answer is Option (3) - Profitability Ratios

Profitability ratios delve into a company's capacity to generate earnings based on the utilization of its resources. Prominent profitability ratios include the Gross Profit ratio, Operating ratio, Net Profit Ratio, Return on Investment (ROI) or Capital Employed, Earnings per Share (EPS), Book Value per Share, Dividend per Share, and Price/Earnings (P/E) ratio.