An activity ratio measures a firm's
A) sales per employee.
B) frequency of purchases.
C) level of inventory.
D) efficiency in using its assets.
E) sales per selling expense dollar.

Question

Quizplus · Accepted Answer

An activity ratio measures how efficiently a firm is using its assets to generate revenue. Examples of activity ratios include inventory turnover, accounts receivable turnover, and asset turnover. These ratios provide insights into how quickly a company is selling its products, collecting payment, and using its assets to generate revenue. Sales per employee, frequency of purchases, and sales per selling expense dollar are all examples of other ratios that focus on different aspects of a company's operations.

An Activity Ratio Measures a Firm's