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Is a high profitability ratio good?

Asked 2 years ago

Good morning. Currently, my net profitability ratio percentage is sitting at 9%. Is this good or bad?

Geovanni Buckley

Tuesday, May 17, 2022

A profitability ratio of 9% isn't bad. According to industry standards, a good profitability ratio is between 10% to 20%. If you're currently at 9% aim from 9.35% and higher.

However, you should consider the type of industry you're in and compare the ratios to leading companies in your industry.

Abeeha Qasmi

Sunday, May 29, 2022

A profitability ratio is a financial metric that helps analyze a business’s potential for generating revenues. A high profitability ratio indicates that the company is performing well in the market. An excellent net profitability ratio varies from industry to industry.

In general, you should aim for a profitability ratio between 10% to 20%. However, always consider the average net profit in your respective industry to gauge your business performance.

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