Activity ratios allow investors to compare the relative efficiencies of similar companies.

Question

Quizplus · Accepted Answer

Activity ratios measure how efficiently a business uses its resources to generate revenue. By comparing the activity ratios of similar companies, investors can gain insight into which companies are achieving higher levels of efficiency in areas such as asset utilization, inventory management, and revenue generation. Therefore, activity ratios are a useful tool for analyzing and comparing the performance of similar companies in the same industry.

Activity Ratios Allow Investors to Compare the Relative Efficiencies of Similar