Profitability refers to a company's ability to generate more money than it spends. It is a key measure of financial health, indicating how well a business can turn its revenues into profits. When a company is profitable, it can reinvest in its operations, pay dividends to shareholders, and grow over time. To assess profitability, businesses often look at metrics like net profit margin and return on investment. These figures help determine how efficiently a company is using its resources. A profitable business is generally more attractive to investors and can withstand economic challenges better than one that consistently operates at a loss.