Investors and Financial Analysts Wanting to Evaluate the Operating Efficiency

question 13

Multiple Choice

Investors and financial analysts wanting to evaluate the operating efficiency of a firm's managers would probably look primarily at the firm's

• A)debt utilization ratios.
• B)liquidity ratios.
• C)asset utilization ratios.
• D)profitability ratios.

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Definitions:

ABC Approach

A methodology used in inventory management and cost accounting that prioritizes items based on their importance, cost, or another criterion, often categorized into A, B, and C groups.

Cash Discount

A reduction in the invoice amount by a seller if the buyer pays within a specified period, incentivizing early payment.

Purchases Discount

Purchases Discount represents a reduction in the price of goods a company buys, usually offered by suppliers as an incentive for early payment.

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen.