Activity ratios measure the effectiveness of the firm's management in using its various resources to achieve profits.

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Activity ratios, also known as efficiency ratios, measure how well a company manages its resources to generate sales and profits. These ratios include inventory turnover, accounts receivable turnover, and asset turnover. They help investors and analysts evaluate a company's operational efficiency and effectiveness of management in utilizing its resources. Therefore, the statement is true.

Activity Ratios Measure the Effectiveness of the Firm's Management in Using