Profitability Ratios Measure ________

question 10

Multiple Choice

Profitability ratios measure ________.

• A) a firm's ability to pay short-term obligations using current assets
• B) a firm's operating efficiency
• C) a firm's ability to pay their debts and stay in business
• D) a firm's ability to generate earnings relative expenses

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Definitions:

Value-based Management

A management approach that focuses on creating maximum value for shareholders and customers by basing decisions on their potential to increase value.

Economic Value

The value that an asset or service provides to its user, often measured in terms of its ability to generate income or save costs.

Value Drivers

Factors that significantly impact the value of a company's products or services, which in turn affect the company's profitability and market value.

Decrease Value

A reduction in the worth or value of an asset or entity.