Businesses often use profitability ratios to gauge their performance against industry benchmarks or competitors. Calculating these ratios involves a straightforward process, typically using figures ...

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

Profitability ratios can help investors and analysts compare the financial efficiency of competing companies. People are often advised to do “the best they can with what they have,” and the same goes ...

Sean Ross is a strategic adviser at 1031x.com, Investopedia contributor, and the founder and manager of Free Lances Ltd. Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, ...

Look for high profitability ratios to identify companies efficiently turning revenue into profits. Analyze margin and return ratios to assess how well a company manages its costs and assets. Compare ...