Description

ABSTRACT:

Mostly every firm is most concerned with its profitability. One of the most commonly used tools of financial ratio analysis is

profitability ratios which are used to determine the company’s bottom line and its return to its investors. Profitability measures are

significant to company promoters and owners similarly. If a small business has outside investors who have put their own money

into the company, the promoters certainly have to show profitability to those investors. Profitability ratios are considered to

evaluate the firm’s ability to generate income. Analysis of profit is of essential concern to investors since they gain revenue in the

form of dividends. Profits are also vital to creditors because profit is one source of funds for liability. Furthermore Management

uses profit as a performance appraisal.