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What is the meaning of Profitability?

May 4, 2011


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Profitability is the ability to earn a financial profit or gain. It is the primary goal of a business, it means that the venture is financially successful. Without profitability a company cannot survive, therefore measuring it is very important for each business. Profitability is measured with income (monies generated from the activities of the business) and expenses (the costs of resources consumed).

If a venture does not yield a profit, key operational factors such as pricing and costs need to be changed.

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