What Is the Purpose of Computing Profitability Ratios

question 78

Multiple Choice

What is the purpose of computing profitability ratios?

• A) To determine liquidity
• B) To determine the most efficient use of resources
• C) To determine the liquidity of the firm
• D) To determine the potential risk of business activity
• E) To determine the potential returns investors can expect

---

Definitions:

Radioactive Decay

Process in which an atom emits energy and/or subatomic particles when its nucleus spontaneously breaks up.

Subatomic Particles

Components smaller than atoms, such as electrons, protons, and neutrons, which make up the atom's structure and properties.

Free Radical

Atom with an unpaired electron. Most are highly reactive.

Hydrogen Bonds

Weak bonds between two molecules caused by the electrostatic attraction between a proton in one molecule and an electronegative atom in the other.