The profitability of a company is generally assessed using which of the following metrics?

Profitability ratios are crucial metrics used to assess a company's profitability in relation to its revenues, expenses, and equity. These ratios provide insights into how efficiently a company is generating profit from its operations and how well it is managing its costs relative to its revenues. By evaluating these ratios, stakeholders can gauge not only the current profitability but also trends over time, which can inform investment decisions or operational strategies.

For example, common profitability ratios include the net profit margin, return on assets (ROA), and return on equity (ROE). These provide a more nuanced understanding of profitability compared to simply looking at revenue or net income on their own, as they take into consideration the context of total sales and the company's capital structure.

While revenue and net income are important components of financial health, they do not provide the comprehensive insight into profitability that profitability ratios do. Total expenses, on the other hand, are a critical factor in profitability but alone do not measure profitability. Rather, they need to be analyzed in relation to revenue to understand overall company performance. Thus, profitability ratios emerge as the most comprehensive metrics for assessing a company’s profitability.