If your goal is determine how effectively a firm is managing its assets, which of the following sets of ratios would you examine?
A)profit margin, current ratio, fixed charge coverage ratio
B)quick ratio, debt ratio, time interest earned
C)inventory turnover ratio, days sales outstanding, fixed asset turnover ratio
D)total assets turnover ratio, price earnings ratio, return on total assets
E)time interest earned, profit margin, fixed asset turnover ratio

Question

Quizplus · Accepted Answer

The ratios in option C are specifically related to asset management. The inventory turnover ratio measures how efficiently a company is managing its inventory, days sales outstanding helps to determine how quickly a company is collecting payment from customers, and fixed asset turnover ratio helps to determine how efficiently a company is using its fixed assets to generate sales. Therefore, option C is the best choice for examining how effectively a firm is managing its assets.

If Your Goal Is Determine How Effectively a Firm Is