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

Question

Quizplus · Accepted Answer

The inventory turnover ratio, days sales outstanding, and fixed asset turnover ratio all provide insight into how well a company is managing its assets. The inventory turnover ratio measures how quickly a company is selling its inventory, while days sales outstanding measures how quickly a company is collecting its accounts receivable. The fixed asset turnover ratio measures how effectively a company is using its fixed assets to generate sales. Together, these ratios provide a comprehensive view of an organization's asset management.

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