What Is Profitability? - Definition & Analysis


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question 1 of 3

What is the difference between profit and profitability?

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1. This year your company had a net income of $165,000 and net sales of $2,500,000. What is your net profit margin? What does it mean?

2. Your company earned a gross profit of $2,000,000 last year and had net sales of $18,000,000. What was your gross margin and what does it mean?

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About This Quiz & Worksheet

In addition to calculating gross profit margins, net profit margins, and equity, this quiz/worksheet will ask you to answer questions about profit, profitability, gross margin, and operating margin.

Quiz & Worksheet Goals

To be more precise, you will be examined on your understanding of:

  • The difference between profit and profitability
  • Solving for net profit margin
  • Solving for gross profit margin
  • The difference between gross margin and operating margin
  • Solving for equity

Skills Practiced

  • Information recall - access the knowledge you've gained regarding profit
  • Distinguishing differences - compare and contrast topics from the lesson, such as gross and net profit margin
  • Critical thinking - apply relevant concepts to examine information about making money in a different light
  • Reading comprehension - ensure that you draw the most important information from the related profitability lesson

Additional Learning

Still curious about profitability? Take a look at the associated lesson named What Is Profitability? - Definition & Analysis. You can use this tutorial to learn more about:

  • Net and gross profit
  • Return on assets
  • Return on equity
  • Analyzing profitability