Activity ratios help an analyst assess the company's management of its working capital.

Question

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Activity ratios, such as inventory turnover ratio and accounts receivable turnover ratio, provide insight into a company's efficiency in managing its working capital. These ratios reveal how quickly the company is able to convert its assets into cash, and can be used to evaluate the effectiveness of management's strategies for managing the company's resources.

Activity Ratios Help an Analyst Assess the Company's Management of Its