Efficiency ratios indicate:
I. How productively is the firm utilizing its assets.
II. How liquid is the firm.
III. How profitable is the firm.
IV. How highly is the firm valued by investors.
A) I only
B) II only
C) III only
D) III and IV only

Question

Efficiency ratios indicate:
I. How productively is the firm utilizing its assets. 
II. How liquid is the firm.
III. How profitable is the firm.
IV. How highly is the firm valued by investors.
A) I only
B) II only
C) III only
D) III and IV only

Quizplus · Accepted Answer

Efficiency ratios are used to indicate how productively a firm is utilizing its resources and assets to generate revenue. They do not provide information about the liquidity, profitability, or valuation of the firm.

Efficiency Ratios Indicate: I. How Productively Is the Firm Utilizing Its Assets