Activity ratios measure how efficiently or effectively a company is managing its short term assets and short term obligations.

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Activity ratios, also called efficiency ratios, are designed to measure a company's ability to use its assets efficiently to generate sales or revenue. These ratios include inventory turnover, accounts receivable turnover, and accounts payable turnover ratios. They assess how effectively a company is managing its short-term assets and obligations.

Activity Ratios Measure How Efficiently or Effectively a Company Is