__________ ratios measure how effectively a company uses its assets.
A) Liquidity
B) Activity
C)Profitability
D) Coverage

Question

__________ ratios measure how effectively a company uses its assets.
A) Liquidity
B) Activity 
C)Profitability
D) Coverage

Quizplus · Accepted Answer

Activity ratios, also known as asset utilization ratios, measure how effectively a company uses its assets to generate revenue and profits. These ratios include inventory turnover, accounts receivable turnover, and total asset turnover ratios. Activity ratios help investors and analysts understand how efficiently a company is using its assets to generate income and identify potential operational inefficiencies.

__________ Ratios Measure How Effectively a Company Uses Its Assets