Net Profit Ratio Signifies:

Operational Profitability
Liquidity Position
Solvency
Profit

The correct answer is: A. Operational Profitability.

Net profit ratio is a measure of a company’s profitability. It is calculated by dividing net profit by net sales. A higher net profit ratio indicates that a company is more profitable.

Liquidity position is a measure of a company’s ability to meet its short-term obligations. It is calculated by dividing current assets by current liabilities. A higher liquidity position indicates that a company is more able to meet its short-term obligations.

Solvency is a measure of a company’s ability to meet its long-term obligations. It is calculated by dividing total assets by total liabilities. A higher solvency position indicates that a company is more able to meet its long-term obligations.

Profit is the difference between revenue and expenses. It is a measure of a company’s financial performance. A higher profit indicates that a company is more profitable.

Here are some additional details about each of the options:

  • Operational profitability is a measure of how well a company is managing its costs and generating revenue. It is a key indicator of a company’s financial health.
  • Liquidity position is a measure of how well a company is able to meet its short-term obligations. It is important for companies to have a good liquidity position so that they can pay their bills on time and avoid financial problems.
  • Solvency is a measure of how well a company is able to meet its long-term obligations. It is important for companies to have a good solvency position so that they can avoid financial problems in the future.
  • Profit is a measure of how much money a company makes after it has paid all of its expenses. It is an important indicator of a company’s financial performance.
Exit mobile version