how is business profitability best measured 
the gross profit margin operating profit and net profit margin ratios are the most commonly used measurements of business profitability net profit margin reflects the amount of profit a business gets from its total revenue after all expenses are accounted for operating profit reflects the profit from the company s core operations including sales general and administrative expenses and gross profit margin indicates profit that exceeds the cost of goods sold the bottom lineprofitability ratios offer companies investors and analysts a way to assess various aspects of a company s financial health there are two main types of profitability ratios margin ratios and return ratios margin ratios measure a company s ability to generate income relative to costs return ratios measure how well a company uses investments to generate returns and wealth for the company and its shareholders 