Activity ratios measure
A) how rapidly assets flow through the firm
B) how frequently the firm's stock is traded
C) how rapidly employees turn over
D) the profitableness of accounts receivable

Question

Quizplus · Accepted Answer

Activity ratios measure how rapidly assets (such as inventory or accounts receivable) flow through the firm. They show how efficiently a company is using its assets to generate revenue. Examples of activity ratios include inventory turnover ratio and accounts receivable turnover ratio. B, C, and D are all unrelated to activity ratios.

Activity Ratios Measure