Final answer:
There are several accounting measures that can be used for profitability analysis, including gross profit margin, net profit margin, and return on investment (ROI). It is important to consider industry and context when selecting the most relevant measures.
Step-by-step explanation:
When analyzing profitability, there are several accounting measures that can be used. Some of the key measures include:
- Gross Profit Margin: This ratio measures the percentage of revenue that remains after deducting the cost of goods sold. It is calculated by dividing gross profit by revenue.
- Net Profit Margin: This ratio measures the percentage of revenue that remains after deducting all expenses, including taxes and interest. It is calculated by dividing net profit by revenue.
- Return on Investment (ROI): This ratio measures the profitability of an investment by comparing the net profit to the initial investment amount. It is calculated by dividing net profit by the initial investment.
These are just a few examples of the accounting measures that can be used for profitability analysis. It is important to consider the specific industry and context when selecting the most relevant measures.