Profitability Ratios: Key Metrics for Assessing Financial Health and Performance, With Formulas and Examples

Profitability ratios are financial ratios used to measure a company’s ability to generate profits relative to its revenue, assets, or equity. These ratios are important for investors, creditors, and analysts as they provide insights into a company’s financial performance and potential for growth. Here are some of the most commonly used profitability ratios: