The CEO of J.D. Edwards & Company spends a considerable amount of time studying indicators of the relative effectiveness of his organization. The most reliable financial ratios for studying the relative effectiveness of an organization are
A) profitability ratios.
B) flexibility ratios.
C) debt ratios.
D) activity ratios.
E) asset ratios.

Question

Quizplus · Accepted Answer

Profitability ratios are the most reliable indicators of an organization's relative effectiveness as they measure the ability to generate earnings compared to expenses and other costs.