Turnover Ratios Differ from the Current and Quick Ratios in That

question 187

Multiple Choice

Turnover ratios differ from the current and quick ratios in that they

• A)are based on working capital instead of cash.
• B)are based on a point of time instead of a period of time.
• C)are activity ratios.
• D)measure the profitability of a company instead of its liquidity.

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Definitions:

Activity-Based Budgeting (ABB)

A budgeting approach that determines the cost of activities necessary for producing a product or service, aiming to improve cost efficiency.

Activity-Based Costing (ABC)

A costing methodology that assigns overhead and indirect costs to specific activities, thereby providing more accurate cost information.

Sales Volume

Refers to the number of units of product or service sold by a company over a specific time period, indicating business activity level.

Unfavourable Variance

A financial metric indicating that actual costs were higher or revenues were lower than the planned or standard amounts.