_____ Measure the Ability of an Organization to Convert Assets

question 84

Multiple Choice

_____ measure the ability of an organization to convert assets into the cash it needs to pay off liabilities that come due in the next year.

• A)Profitability ratios
• B)Activity ratios
• C)Liquidity ratios
• D)Leverage ratios

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Definitions:

Long-Run Adjustment

The process of economic agents fully adapting to changes in conditions or policies over time, reaching a new equilibrium.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, representing the additional amount earned beyond the next best alternative.

Economies of Scale

Cost advantages that a business can achieve by increasing the scale of production, leading to a lower cost per unit of output.

Economic Profit

The difference between a firm’s total revenue and its total costs, including both explicit and implicit costs.