Tont has just come into a significant inheritance and decides to invest in stock in a solid, stable company. Which financial ratio is the most helpful in determining where he invests?

a. Liquidity ratio
b. Profitability ratio
c. Leverage ratio
d. Activity ratio

If you understand what these terms mean, then your answer is obvious.

leverage ratio JENNy

To determine where to invest in a solid and stable company, Tont should consider using the profitability ratio. The profitability ratio is a financial indicator that assesses a company's ability to generate profit relative to its revenues, investments, and costs. It provides insights into the company's overall financial performance and helps Tont evaluate the company's profitability potential.

To calculate the profitability ratio, Tont can use various ratios such as the gross profit margin, net profit margin, return on assets (ROA), and return on equity (ROE). These ratios compare the company's profits to its sales, assets, and equity, respectively, to gauge its efficiency in generating returns.

By analyzing the profitability ratio of different companies, Tont can make informed investment decisions based on the company's financial health and potential returns. Typically, solid and stable companies tend to have healthy and consistent profitability ratios. However, it is important for Tont to conduct thorough research and analysis of various factors such as industry trends, competitive landscape, and future growth prospects before making a final investment decision.