How profitable is profitability?
One of the key factors for finding stocks with high potential is their profitability. There are different ways to assess a company’s profitability and one of these ways is by calculating the ratio of gross profits over total assets. This measure was described in a paper called “The Other Side of Value: The Gross Profitability Premium” by Robert Novy-Marx, from the University of Rochester. How well can this ratio work if we try to do this ourselves, and why would it work, if a
