Question

The ______ ratios are primarily measures of return.

Options

• liquidity

• activity

• debt

• profitability

Answer 1

The profitability ratios are primarily measures of return.

Explanation:

Profitability ratios are primarily measures of return because they show how effectively a firm converts sales, assets, or equity into earnings (examples include net profit margin, return on assets, and return on equity), so they directly measure the returns generated by the business.