Which of the following is the best indicator of management's effectiveness at generating profits relative to the firm's assets?
A)Quick ratio
B)Fixed assets turnover
C)Operating income return on investment
D)Accounts receivable turnover

Question

Quizplus · Accepted Answer

Operating income return on investment (ROI) is a key indicator of management's effectiveness at generating profits relative to the firm's assets. It measures the amount of operating income (profit) that a company generates per dollar of investment in assets. This ratio takes into account both how efficiently a company uses its assets and how successful it is in generating income from those assets. Quick ratio and accounts receivable turnover are measures of liquidity, while fixed assets turnover measures how efficiently a company utilizes its fixed assets. None of these ratios focus specifically on management's effectiveness at generating profits relative to the firm's assets.

Which of the Following Is the Best Indicator of Management's