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What are profitability ratios?

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Question: What are profitability ratios?
Answer:

Profitability ratios are one of the most commonly used tools of financial ratio analysis. They are important to the small business owner and any investors in the business. Profitability ratios measure both returns on the investor's money in the firm and the firm's margins. Profitability ratios show the firm's overall efficiency in generating returns and performance.

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