Question:
Which of the following is not a profitability ratio?
Which of the following is not a profitability ratio?
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The Current Ratio is a liquidity ratio, not a profitability ratio.
Updated On: Sep 1, 2025
- Gross profit ratio
- Net profit ratio
- Operating ratio
- Current ratio
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The Correct Option is D
Solution and Explanation
Step 1: Definition of profitability ratios.
Profitability ratios are used to assess a company's ability to generate profit relative to its revenue, assets, or equity. Examples include Gross Profit Ratio, Net Profit Ratio, and Operating Ratio.
Step 2: The current ratio.
The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations and is not related to profitability.
Step 3: Conclusion.
Thus, the correct answer is (D) Current ratio. Final Answer: \[ \boxed{\text{Current ratio}} \]
Profitability ratios are used to assess a company's ability to generate profit relative to its revenue, assets, or equity. Examples include Gross Profit Ratio, Net Profit Ratio, and Operating Ratio.
Step 2: The current ratio.
The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations and is not related to profitability.
Step 3: Conclusion.
Thus, the correct answer is (D) Current ratio. Final Answer: \[ \boxed{\text{Current ratio}} \]
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