Measures of profitability vary from industry to industry; however, whichever measures are used, profitability ratios assess the business’s ability to generate earnings compared to its expenses and other costs incurred during a specific period of time. For example, in capital-intensive businesses, profitability is usually expressed in terms of return on net assets. Examples of profitability ratios include profit margin, return on assets and return on equity. In general, a trend of increasing profitability is a good sign; though because profitability varies from industry to industry, always compare values against the values of other companies in the same industry. See also Ratio Analysis and Ratio, Solvency.« Back to Glossary Index
Discover the world’s largest Glossary of Procurement terms
With over 800 Procurement specific terms (and growing) you will find everything you need to know or thought you knew about the Procurement function. Our aim is to provide you with a comprehensive list collated from the Comprara Groups hub of training and consulting source materials.The Procurement Glossary has been compiled by industry expert Paul Rogers.