# profitability ratios

Help answer the following budgeting and forecasting problems in at least 300 words.

What are profitability ratios? Who uses them and why? What do Dell and HP's profitability ratios suggest?

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#### Solution Preview

Financial ratios are used by investors to evaluate the financial state of company. There are 5 Ratio categories most often used 1. liquidity ratios

2. leverage ratios

3. activity ratios

4. profitability ratios

5. market ratios

For this question, the focus is on the profitability ratios. There are six.

1. Return on Assets (ROA) Calculated by dividing the net income (NI) by the total assets (TA)---NI/TA

2.Return on ...

#### Solution Summary

This post outlines profitability ratios and who uses them. An understanding of the valuable information to be derived from ratios. Detailed descriptions are included of the profitability ratios. Their uses are detailed and calculations are also included. The concepts discussed in this solution include five ratio categories, profitability ratios, and locations for input ratios. The explanation is given in 302 words.