Financial ratios that help judge a firm's efficiency in using its current assets and liabilities are collectively referred to as:
A)equity ratios
B)ability ratios
C)activity ratios
D)profitability ratios

Question

Quizplus · Accepted Answer

Activity ratios measure how effectively a company is managing its current assets and liabilities to generate revenue. These ratios include inventory turnover, accounts receivable turnover, and asset turnover ratios. Equity ratios measure a company's financial leverage and its ability to meet long-term obligations. Profitability ratios show how much profit a company is generating in proportion to its revenue. Ability ratios focus on a company's ability to meet short-term debt obligations.

Financial Ratios That Help Judge a Firm's Efficiency in Using