________ Ratios Measure the Ability of an Organization to Pay

question 98

Multiple Choice

________ ratios measure the ability of an organization to pay its short-term debts.

• A)Leverage
• B)Liquidity
• C)Activity
• D)Profit
• E)Inventory turnover

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Definitions:

Fixed Inspection Cost

A cost that remains constant for a specific period regardless of the level of goods produced or inspected.

Machine-Hours

Machine-hours are a measure of the amount of time a machine is operated, used in manufacturing to allocate costs to products.

Relevant Range

It refers to the span of activity within which the assumptions about fixed and variable cost behaviors hold true.

Contribution Margin

The amount of revenue left after deducting all variable costs associated with producing and selling a product, indicating how much contributes towards covering fixed costs and generating profits.