Ratios that measure how eﬃciently a ﬁrm's management uses its assets and equity to generate bottom line net income are known as _____ ratios.
A) Asset management
B) Long-term solvency
C) Short-term solvency
D) Proﬁtability
E) Market value

Question

Quizplus · Accepted Answer

The ratios that measure how efficiently a firm's management uses its assets and equity to generate bottom line net income are known as profitability ratios. These ratios include return on assets (ROA), return on equity (ROE), gross profit margin, operating profit margin, and net profit margin. Options A, B, C, and E refer to different types of ratios (asset management, long-term solvency, short-term solvency, and market value) that measure different aspects of a firm's financial performance.

Ratios That Measure How Eﬃciently a ﬁRm's Management Uses Its