Ratios that measure how efficiently a firm uses its assets to generate sales are known as ________ ratios.
A)profitability
B)long-term solvency
C)short-term solvency
D)utilization
E)market value

Question

Quizplus · Accepted Answer

Utilization ratios measure how efficiently a firm uses its assets to generate sales. Examples include inventory turnover ratio, accounts receivable turnover ratio, and fixed asset turnover ratio. Profitability ratios measure the overall profitability of a firm, long-term solvency ratios measure a firm's ability to meet long-term debt obligations, short-term solvency ratios measure a firm's ability to meet short-term debt obligations, and market value ratios measure a firm's market value relative to its financial performance.

Ratios That Measure How Efficiently a Firm Uses Its Assets