Profitability

Profitability refers to a company's ability to generate more income than it spends. It’s a measure of financial success, showing how effectively a business can turn sales into profit. If a business earns $100 and spends $80, it has a profit of $20, making it profitable. Key financial metrics such as profit margin and return on investment help assess profitability. A profitable business can reinvest, pay dividends, and create value for owners and investors, while a lack of profitability can signal financial trouble or inefficiency in operations.