Asked by Marisa Belber on May 12, 2024

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All of the following are profitability ratios EXCEPT

A) inventory turnover.
B) return on equity.
C) net profit margin.
D) gross profit margin.

Profitability Ratios

Measures of a company’s overall financial performance by evaluating its ability to generate revenues in excess of expenses.

Inventory Turnover

Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.

Return on Equity

A measure of the profitability of a business in relation to the equity, calculated as net income divided by shareholders' equity, expressing the company's ability to generate profits from its shareholders' investments.

  • Identify the relevance of profitability ratios in evaluating a firm’s financial performance.
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Katsuky BakugooMay 15, 2024
Final Answer :
A
Explanation :
Inventory turnover is a measure of how efficiently a company manages its inventory, indicating how many times a company has sold and replaced inventory over a period. It is considered an efficiency ratio rather than a profitability ratio. Profitability ratios, like return on equity, net profit margin, and gross profit margin, measure a company's ability to generate earnings relative to its revenue, assets, or shareholders' equity.