The Following Groups of Ratios Primarily Measure Risk

question 82

Multiple Choice

The following groups of ratios primarily measure risk:

• A) activity, debt, and profitability.
• B) liquidity, activity, and debt.
• C) liquidity, activity, and profitability.
• D) liquidity, activity, and common stock.

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Definitions:

Labor Efficiency Variance

measures the difference between the actual labor hours used and the standard labor hours expected for the production achieved, indicating labor efficiency.

Labor Efficiency Variance

A measure of the difference between the actual number of labor hours used and the standard number of labor hours expected to produce a certain level of output.

Materials Quantity Variance

The financial difference between the actual quantity of materials used in production and the standard expected quantity.

Favorable

A term used to describe outcomes or variances that are positive or beneficial to a business, such as lower costs or higher revenues than expected.