Which of the Following Statements Is True About Capacity Efficiency

question 60

Multiple Choice

Which of the following statements is true about capacity efficiency?

• A)It tells us how efficiently capacity has been designed.
• B)It is the percentage of effective capacity used to produce the actual output.
• C)It is the extent to which the design capacity is used.
• D)It is calculated by dividing the effective capacity by design capacity.

---

Definitions:

Current Obligations

Obligations or liabilities that are due to be settled within one year, similar to current liabilities but emphasizes timely duty.

Times Interest Earned

A metric used to measure a company's ability to meet its debt obligations, calculated by dividing earnings before interest and taxes (EBIT) by interest expenses.

Interest Expense

The cost incurred by an entity for borrowed funds over a specific period, including loans, bonds, or lines of credit.