Ratios That Measure How Efficiently a fiRm Uses Its Assets

question 230

Multiple Choice

Ratios that measure how efficiently a firm uses its assets to generate sales are known as:

• A) Asset management ratios.
• B) Long-term solvency ratios.
• C) Short-term solvency ratios.
• D) Profitability ratios.
• E) Market value ratios.

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Definitions:

Daily Profit

The financial gain calculated as the difference between revenue and expenses for a single day.

Capacity

The maximum output that a company can produce under normal conditions over a given period of time.

Marginal Costs

The uplift in total financial outlay required for the making of another unit of a product or service.

Cournot Duopolists

Firms in a market where only two producers exist and compete under the Cournot assumption, where each firm decides its production level assuming the output of its competitor is fixed.