Question

From the following, which ratio is not a part of Profitability Ratio:

Options

• Proprietary Ratio

• Gross Profit Ratio

• Operating Ratio

• Net Profit Ratio

Answer 1

Proprietary Ratio

Explanation:

The Proprietary Ratio belongs to the category of Solvency Ratios, which measure the long-term financial stability and capital structure of a company by showing the proportion of total assets funded by shareholders’ equity. On the other hand, the Gross Profit Ratio, Operating Ratio, and Net Profit Ratio are all core components of Profitability Ratios, as they specifically focus on analysing the company’s financial returns and efficiency in generating profits from its sales operations.