Profitables

Profitables is an informal term used to describe assets, business units, products, or ventures that generate profit that covers costs and provides a surplus. Although not a formal category in accounting, it is commonly used by managers and analysts to identify commercially viable elements of a portfolio.

Profitability is measured with metrics such as net profit margin, gross margin, return on assets (ROA), and return on equity (ROE). Cash-flow indicators, including operating cash flow and free cash flow, are also key. Break-even analysis and unit economics assess profitability at the product or project level.

Profitables arise from pricing power, scalable operations, efficient capital use, and durable demand. Critical factors include a strong value proposition, competitive advantage, cost management, and prudent investment. Firms seek profitability through productivity gains, price optimization, and strategic focus on core activities.

Industry variation is large: software and services often exhibit high margins, while capital-intensive industries may rely on volume and asset utilization. Profitability can shift with competition, regulation, technology, and macro conditions, making ongoing monitoring essential.

Limitations of focusing on profitables include the temporariness of profits, accounting choices, and potential neglect of growth, risk, or social impact. A balanced view considers profitability alongside liquidity, resilience, and long-term value creation.