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 |
| 9.12% |
| 586.56 |
| 14.57% |
| 0.67 |
| 0.17 |
| -52.56% |
| 1.66 |
| 1.01 |
| -0.60 |
| 1.39 |
| 0.98 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 11.32% | 7.89% | 8.88% | 10.08% | 9.01% | 9.38% | 10.53% | 10.64% | 10.67% | 9.64% |
| 968.35 | 434.87 | 554.26 | 734.28 | 572.02 | 624.93 | 812.97 | 832.85 | 839.01 | 663.66 |
| 20.35% | 18.23% | 19.53% | 18.70% | 17.62% | 17.22% | 16.93% | 17.03% | 16.53% | 17.63% |
| 0.63 | 0.51 | 0.54 | 0.61 | 0.58 | 0.61 | 0.68 | 0.68 | 0.70 | 0.61 |
| 0.22 | 0.14 | 0.17 | 0.18 | 0.20 | 0.19 | 0.22 | 0.21 | 0.24 | 0.23 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.71 | 1.53 | 1.57 | 1.65 | 1.58 | 1.61 | 1.69 | 1.70 | 1.73 | 1.60 |
| 1.03 | 0.77 | 0.81 | 0.95 | 0.89 | 0.94 | 1.09 | 1.08 | 1.11 | 0.97 |
| 0.18 | -0.40 | -0.31 | -0.13 | -0.24 | -0.20 | -0.08 | -0.20 | -0.13 | 0.00 |
| 4.93 | 4.78 | 6.60 | 4.29 | 2.95 | 2.46 | 1.89 | 2.64 | 1.84 | 2.35 |
| 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 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 |
| 4.03% | 0.87% | 1.32% | 2.49% | 1.69% | 2.13% | 3.21% | 3.36% | 3.52% | 2.48% |
| 1.12 | 1.08 | 1.17 | 1.14 | 1.09 | 1.07 | 1.06 | 1.05 | 1.02 | 1.06 |