Basically profitability shows the ability of a business firm to earn profit over a period of time
because a business firm always earns profits to survive and grow over a long period of time. The
overall measure of success of a business firm is the profitability which results from the effective
use of its resources and shows the return on sales and capital employed. There are two important
ways how we can measure profitability. One is to measure return from sales i.e. Net Profit
Margin, another is return from investment i.e. Return on Investment. The following formula is
used to measure net profit margin