Financial Ratios Jan was in a big hurry.She had just been given the assignment of reporting on the financial health of her company to the new divisional vice president.Donna, the new vice president, had asked Jan to work up several calculations to help her gain an understanding of the company's financial shape.Jan was working hard and had a big order to fill, one that could make or break her reputation with Donna.She quickly pulled out her old financial management textbook and turned to the chapter on financial ratios to help her answer the questions that were asked.
-Refer to Financial Ratios (Scenario).Donna asked Jan to provide her with an estimate of how efficiently the firm is using its assets.Therefore, Jan turned to the section in her textbook on ________ ratios.
A)leverage
B)activity
C)profitability
D)liquidity
E)none of the above

Question

Quizplus · Accepted Answer

Activity ratios, also known as efficiency ratios, help measure how effectively a company is using its assets to generate revenue. Examples of activity ratios include inventory turnover ratio, accounts receivable turnover ratio, and asset turnover ratio.

Financial Ratios Jan Was in a Big Hurry