When financial information is used for control purposes,_____ indicate how well the organization is being managed.
A) liquidity ratios
B) profitability ratios
C) debt ratios
D) leverage ratios
E) activity ratios

Question

Quizplus · Accepted Answer

Profitability ratios measure the organization's ability to generate profits from its operations. If these ratios are strong, it indicates that the organization is being managed effectively and generating sufficient profits to cover its expenses and potentially invest in future growth. The other ratios listed are important financial metrics but may not provide as direct of an indication of management effectiveness as profitability ratios.

When Financial Information Is Used for Control Purposes,_____ Indicate How