Which of the Following Ratios Measures How Effectively a Firm

question 15

Multiple Choice

Which of the following ratios measures how effectively a firm is managing its assets?

• A)Quick ratio
• B)Times interest earned ratio
• C)Profit margin ratio
• D)Inventory turnover ratio
• E)Price earnings ratio

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Definitions:

Maturity Stage

A phase in the product life cycle characterized by slow growth, increased competition, and a focus on retaining market share through differentiation and efficiency.

Excess Capacity

The situation in which a business can produce more goods or services than currently demanded, often leading to inefficiencies.

Product Life Cycle

The progression of a product through stages of introduction, growth, maturity, and decline in the market.

Commoditization

The process by which unique products become indistinguishable from one another in the eyes of the market, often leading to competition based primarily on price.