Asked by PERLA MENDIOLA on Jun 04, 2024
Verified
Which of the following is used to measure how efficiently a company uses the resources at its disposal?
A) Solvency ratios.
B) Asset turnover ratios
C) Market ratios.
D) Liquidity ratios.
Asset Turnover Ratios
Ratios that capture how efficiently a company uses its assets.
Solvency Ratios
Ratios that measure a company’s ability to meet its long-term obligations.
- Identify the use of asset, liability, and equity ratios in the analysis of a company's operational efficiency.
Verified Answer
ZK
Zybrea KnightJun 07, 2024
Final Answer :
B
Explanation :
Asset turnover ratios are used to measure how efficiently a company uses its assets to generate revenue. It shows how much revenue is generated for every dollar spent on assets. This ratio can provide insight into how well a company is managing its resources and if it is maximizing the use of its assets to generate revenue. Solvency ratios measure a company's ability to pay long-term debts, market ratios measure a company's stock price and investor perception, and liquidity ratios measure a company's ability to meet short-term obligations.
Learning Objectives
- Identify the use of asset, liability, and equity ratios in the analysis of a company's operational efficiency.