Profitability ratios measure a company’s profitability stemming from financial statements. One of the main sources must be the income statement. It’s because of all the company’s main forms of income and expense. 

There are countless ways to slice and dice income statements. Nevertheless, there are three main margin ratios that come up most frequently in the analysis from both investors and marketers. These ratios are the gross margin, EBITDA margin, and net margin.