Ratios that measure how eﬃciently a ﬁrm uses its assets to generate sales are known as:
A) Asset management ratios.
B) Long-term solvency ratios.
C) Short-term solvency ratios.
D) Proﬁtability ratios.
E) Market value ratios.

Question

Quizplus · Accepted Answer

Asset management ratios assess how well a firm utilizes its assets to generate sales. This includes ratios like inventory turnover, accounts receivable turnover, and total asset turnover. Long-term solvency ratios measure a firm's ability to meet long-term debt obligations, short-term solvency ratios evaluate a firm's ability to meet short-term debt obligations, profitability ratios focus on a firm's ability to earn a profit, and market value ratios assess the market value of a firm's stock.

Ratios That Measure How Eﬃciently a ﬁRm Uses Its Assets