________ ratios assess how efficiently the firm is using its assets to generate profits.
A)Liquidity
B)Leverage
C)Activity
D)Profitability

Question

Quizplus · Accepted Answer

Activity ratios, also known as efficiency ratios, measure how well a company uses its assets to generate revenue. These ratios evaluate the performance of the company's operations and provide insight into its ability to manage its assets effectively. Examples of activity ratios include inventory turnover ratio, accounts receivable turnover ratio, and total asset turnover ratio. Profitability ratios, on the other hand, assess how effectively the company generates profits.

________ Ratios Assess How Efficiently the Firm Is Using Its