CFA Practice Question

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CFA Practice Question

Which of the following is not a measure of profitability?

A. Return on equity
B. Interest coverage ratio
C. Operating income
D. Operating expense ratio
E. Return on assets
Correct Answer: B

Return on equity is the rate of return earned on stockholders' equity in the business. It is a measure of profitability.

Return on assets indicates the firm's return on all the capital employed.

User Contributed Comments 4

User Comment
Gina Interest Coverage Ratio = EBIT/Interest Expense
a financial risk ratio; earnings flow; how far can earnings decline before it becomes impossible to service debt with them.
mordja Interest coverage ratio is a solvency ratio of the coverage ratio type.
bravoshieh Really? Should not it be "Operating income ratio" rather?
ibrahim18 @bravoshieeh. I thought so too
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