Final answer:
Profitability ratios assess a firm's profit generation from assets, with key metrics like ROA and ROE.
Explanation:
Profitability ratios are financial metrics used to evaluate a company's ability to generate profits from its operations and assets. These ratios measure how well a firm utilizes its assets to generate profit. Return on assets (ROA) and return on equity (ROE) are two common profitability ratios used to assess a company's financial performance. Analyzing profitability ratios is crucial for investors, lenders, and company management to assess the financial health and performance of a business.
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