Which One of the Following Ratios Would Not Likely Be

question 19

Multiple Choice

Which one of the following ratios would not likely be used by a short-term creditor in evaluating whether to sell on credit to a company?

• A) Current ratio
• B) Inventory turnover
• C) Asset turnover
• D) Accounts receivable turnover

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Definitions:

Operational Performance

Evaluation of an organization's effectiveness in producing its goods or services, considering efficiency and productivity.

EBIT

EBIT, an indicator of corporate earnings, captures the profit of a company by including all costs except for those related to interest and taxes.

Income Taxes

Taxes imposed by the government on income generated by businesses and individuals within their jurisdiction.

EBIT

Earnings Before Interest and Taxes - a measure of a firm's profitability that excludes interest and income tax expenses.