Turnover ratios differ from the current and quick ratios in that they
A)are based on working capital instead of cash.
B)are based on a point of time instead of a period of time.
C)are activity ratios.
D)measure the profitability of a company instead of its liquidity.

Question

Quizplus · Accepted Answer

Turnover ratios are activity ratios that measure how efficiently a company uses its assets, such as inventory or accounts receivable, to generate revenue. In contrast, current and quick ratios are liquidity ratios that measure a company's ability to meet its short-term debt obligations with its current assets, including cash. Turnover ratios do not directly measure a company's profitability, but rather its efficiency in utilizing its resources to generate revenue.

Turnover Ratios Differ from the Current and Quick Ratios in That