Which type of financial ratio would be most appropriate for measuring how effectively a firm uses its plants,equipment,and assets?
A) debt
B) activity
C) liquidity
D) profitability

Question

Quizplus · Accepted Answer

Activity ratios (also known as asset utilization ratios) are designed to measure how effectively a company uses its assets to generate revenue. This would include its plants, equipment, and other assets. Examples of activity ratios include inventory turnover, asset turnover, and accounts receivable turnover.

Which Type of Financial Ratio Would Be Most Appropriate for Measuring