Making Sense of Profits Using Profitability Ratios

Making Sense of Profits Using Profitability Ratios

Long-term investors buy shares of a company with the expectation that the company will produce a growing future stream of cash or earnings.

Profits point to the company’s long-term growth and staying power.

But “more” profits aren’t necessarily better than “less.” Oil companies have been in the headlines for generating “record profits” that are larger than any other firms in U.S. history. But from an investor’s standpoint, that doesn’t necessarily make them the most profitable firms.

To read more, please become an AAII Registered User or CLICK HERE.