_____ ratios evaluate how effectively an organization is managing some of its basic operations.
A) Profitability
B) Debt
C) Liquidity
D) Leverage
E) Activity

Question

Quizplus · Accepted Answer

Activity ratios evaluate how effectively an organization uses its assets to generate revenue, how efficiently it manages its inventory, and how quickly it collects its accounts receivable. Profitability ratios measure the company's ability to generate income relative to its revenue, debt ratios evaluate the company's use of debt as a source of funding, liquidity ratios assess an organization's ability to pay off short-term obligations, and leverage ratios indicate how much debt a company has relative to its total assets.

_____ Ratios Evaluate How Effectively an Organization Is Managing Some