Which Ratio Would Be Considered an Activity Ratio

question 86

Multiple Choice

Which ratio would be considered an activity ratio?

• A) Debt-to-equity
• B) Net profit margin
• C) Average collection period
• D) Earnings per share
• E) Current ratio

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle, whichever is longer.

Short-Term Solvency

A financial metric indicating a company's ability to meet its short-term obligations, highlighting liquidity.

Current Ratio

A financial ratio indicating a firm's capacity to meet its short-term liabilities using its existing assets.

Current Assets

Current assets are assets that a company expects to convert into cash, sell, or consume within one year or its operating cycle, whichever is longer.