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The efficiency of the business is measured by the amount of profit earned. The greater the
profit, the more efficient is the business considered to be. The profit of a business may be
measured by studying the profitability of investment in it. Profitability is referred to as lending
power or operating performance of the concerned investment. Profitability is a relative term
and its relation with the other factor by which the profit is affected. It is the test of efficiency,
powerful motivational factor and the measure of control in any business. In the financial
statement analysis literature, a lot of importance has been attached to financial ratios for
assessing a firm's financial performance and condition. Items of the income statement alone
or along with the balance sheet items also can generate a number of profitability ratios. But,
many ratios reveal the similar things. The analyst is always at a loss to find out which ratios
to use to determine profitability of a firm. An attempt to determine inter-relationships between
and among the profitability ratios, in order to select a few ratios which can possibly give
maximum information about the profitability of a firm is an empirical issue.

Corporate Profitability Analysis

SKU: 9788183567602
  • A. Vijayakumar
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