Efficiency ratios:
A)Include the quick-ratio, asset turnover ratio, and return on equity
B)Are used to measure how well the company uses its assets
C)Are used to measure how liquid the company is
D)Help answer questions of firm stability

Question

Quizplus · Accepted Answer

Efficiency ratios are used to measure how well a company uses its assets. Quick ratio and asset turnover ratio are examples of efficiency ratios that indicate how efficiently a company is using its assets to generate revenue. Return on equity, though commonly used to measure profitability, can also be considered an efficiency ratio as it measures how well a company utilizes its equity to generate profits. The liquidity of a company is measured by liquidity ratios (such as current ratio or quick ratio), not efficiency ratios. While efficiency ratios can indirectly address questions of firm stability, they are primarily used to evaluate the company's performance in generating revenue and profits with the assets available.

Efficiency Ratios