If a firm is having difficulty controlling its operating expenses, the trouble will be most directly reflected in the firm's ________________ ratios.
A) liquidity
B) profitability
C) market value
D) asset management
E) long-term solvency

Question

Quizplus · Accepted Answer

Operating expenses directly affect a firm's profitability because they are costs that need to be covered by the firm's revenues. If operating expenses are high or not well controlled, it reduces the firm's net income, thus impacting profitability ratios.

If a Firm Is Having Difficulty Controlling Its Operating Expenses