Question : Which ratio helps to know whether the profits of a firm are increasing or decreasing and if decreasing, the cause of their decrease?
Option 1: Turnover ratio
Option 2: Solvency Ratio
Option 3: Profitability Ratio
Option 4: Liquidity Ratio

Question

Question : Which ratio helps to know whether the profits of a firm are increasing or decreasing and if decreasing, the cause of their decrease?

Option 1: Turnover ratio

Option 2: Solvency Ratio

Option 3: Profitability Ratio

Option 4: Liquidity Ratio

Team Careers360 · Accepted Answer

Correct Answer: Profitability Ratio

Solution : One type of accounting ratio which helps in assessing the financial success of a company at the end of an accounting period is the profitability ratio. The ability of a business to turn a profit from its operations can be verified by profitability ratios.
Hence, the correct option is 3.

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Question : Which ratio helps to know whether the profits of a firm are increasing or decreasing and if decreasing, the cause of their decrease?Option 1: Turnover ratioOption 2: Solvency RatioOption 3: Profitability RatioOption 4: Liquidity Ratio

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Question : Which ratio helps to know whether the profits of a firm are increasing or decreasing and if decreasing, the cause of their decrease?
Option 1: Turnover ratio
Option 2: Solvency Ratio
Option 3: Profitability Ratio
Option 4: Liquidity Ratio