A profitability trend is the evolution of profit within a business. An upward trend means that profit has generally increased over time in the short or long run. A downward profitability trend means profits are declining. Recognizing problems early in profitability trends gives you a better chance to address revenue and cost issues in play.
Profitability refers to a company's relative ability to generate a profit currently and into the future. However, a new business may not have yielded a quarterly profit, but it could have increasing profitability if its profit trend is improving.
On the contrary, an established business may have generated profit in a recent period, while its recent profitability trends call its future viability into question. In the long run, net profitability is vital to achieving for-profit business objectives. However, profit trends are often a strong sign as to big-picture profitability.
The demonstration of Profitability Trend performance shows the comparison of different quantile portfolios. Portfolios were rebalanced monthly using a market-cap weighted method, with 20 bps deducted as costs per transaction.
| Annual Return |
| Cumulative Return |
| Volatility |
| Sharpe ratio |
| Calmar ratio |
| Max Drawdown |
| Omega ratio |
| Sortino ratio |
| Skew |
| Kurtosis |
| Tail ratio |
| Monthly value at risk |
| Alpha |
| Beta |
| SPY |
| 9.02% |
| 568.50 |
| 14.59% |
| 0.67 |
| 0.17 |
| -52.56% |
| 1.65 |
| 1.00 |
| -0.60 |
| 1.38 |
| 0.98 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 11.24% | 7.83% | 8.69% | 9.92% | 8.87% | 9.25% | 10.37% | 10.47% | 10.51% | 9.53% |
| 942.59 | 425.47 | 525.19 | 700.35 | 549.17 | 600.83 | 777.01 | 793.62 | 801.86 | 640.49 |
| 20.38% | 18.26% | 19.55% | 18.72% | 17.64% | 17.24% | 16.95% | 17.05% | 16.55% | 17.66% |
| 0.63 | 0.51 | 0.53 | 0.60 | 0.57 | 0.60 | 0.67 | 0.67 | 0.69 | 0.60 |
| 0.21 | 0.14 | 0.17 | 0.18 | 0.19 | 0.19 | 0.21 | 0.21 | 0.23 | 0.23 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.71 | 1.52 | 1.56 | 1.64 | 1.57 | 1.60 | 1.68 | 1.69 | 1.72 | 1.59 |
| 1.03 | 0.76 | 0.80 | 0.93 | 0.88 | 0.93 | 1.07 | 1.06 | 1.09 | 0.96 |
| 0.18 | -0.40 | -0.31 | -0.12 | -0.24 | -0.19 | -0.07 | -0.19 | -0.12 | 0.01 |
| 4.91 | 4.75 | 6.60 | 4.28 | 2.94 | 2.45 | 1.88 | 2.63 | 1.83 | 2.34 |
| 1.29 | 1.17 | 1.02 | 1.09 | 1.05 | 1.24 | 1.17 | 1.13 | 1.18 | 1.18 |
| -0.09 | -0.08 | -0.08 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 |
| 4.08% | 0.93% | 1.27% | 2.46% | 1.69% | 2.13% | 3.18% | 3.32% | 3.48% | 2.49% |
| 1.12 | 1.08 | 1.17 | 1.14 | 1.09 | 1.07 | 1.06 | 1.05 | 1.02 | 1.06 |