What is the purpose of measuring profitability of a company?

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I selected with No4. To measure a company's ability to earn profit and continue to grow in the short-term and long-term.

To measure a company's ability to earn profit and continue to grow in the short-term and long-term

4th statement is the right answer.

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I agree with those choosing number 4

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answer i no 4 

Profitability is the key objective, and is essential for the survival of the company's work and persistence, and extremely looking forward to the shareholders. Which it is about the relationship between the profits made by the company and investments that contributed to the achievement of these profits. So we find that a great effort directed towards the optimal use of available resources in order to achieve the best possible return for shareholders, worth at least $ achievable on alternative investments that are exposed to the same degree of risk-return. Profitability ratios are used to assess the company's ability to generate profits from its operating activities compared to the expenditures and other costs Taatqaibdtha during a specific period of time. It is also an important tool to measure management efficiency in the use of resources in their possession enough. Indicates profitability ratios which have a higher value compared to the previous periods, the company achieved an increase in sales and thus increase profits. Some examples of the profitability ratios: net profit margin and gross profit, return on assets, return on equity and return on invested capital and net earnings per share.

Profitability ratios are a class of financial metrics that are used to assess a business's ability to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or relative to the same ratio from a previous period indicates that the company is doing well.

Measuring profitability is to know the ability of the company in various stages of its activities. Its proper assessment will help for future planning. Eg. G/P ratio, Operating Profit ratio and N/P Ratio. Proper analysis of these ratios can evaluate where the expenses variated much compared to its previous period / year. So it is very important for all financial decision, especially on budgeting.

Answer no 4 is the only correct answer.

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answer :  number 4  

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I'm fully agree with all previous  and expert answers.

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Correct answer is 4.............................................................................................