Investors and financial analysts wanting to evaluate the operating efficiency of a firm's managers would primarily look at the firm's
A) debt utilization ratios.
B) liquidity ratios.
C) asset utilization ratios.
D) profitability ratios.

Question

Quizplus · Accepted Answer

Asset utilization ratios, such as inventory turnover and asset turnover, provide insight into how efficiently a company is using its assets to generate revenue. This can be an indication of effective management, as maximizing the use of assets can lead to higher profitability. Debt utilization ratios and liquidity ratios primarily assess the company's financial risk and ability to meet short-term obligations, while profitability ratios focus solely on the bottom line without considering the resources used to generate that profit.

Investors and Financial Analysts Wanting to Evaluate the Operating Efficiency