If an analyst's goal is to determine how effectively a firm is managing its assets, which of the following sets of ratios would s/he examine?
A) profit margin, current ratio, fixed charge coverage ratio
B) quick ratio, debt ratio, time interest earned
C) inventory turnover ratio, days sales outstanding, fixed asset turnover ratio
D) total assets turnover ratio, price earnings ratio, return on total assets
E) time interest earned, profit margin, fixed asset turnover ratio

Question

Quizplus · Accepted Answer

The set of ratios that measures how effectively a firm is managing its assets include inventory turnover ratio, days sales outstanding, and fixed asset turnover ratio. The inventory turnover ratio helps in determining the number of times a firm's inventory is sold and replaced over a particular period. The days sales outstanding ratio measures how many days it takes for a firm to collect payments from its customers for the goods or services rendered. The fixed asset turnover ratio measures the level of utilization of a firm's physical assets to generate sales revenue.

If an Analyst's Goal Is to Determine How Effectively a Firm