Activity Ratios Measure ________

question 41

Multiple Choice

Activity ratios measure ________.

• A) a firm's ability to pay short-term obligations using current assets
• B) a firm's operating efficiency
• C) a firm's ability to pay their debts and stay in business
• D) a firm's ability to generate earnings relative expenses

---

Definitions:

Wages Payable

An account that reflects the total amount owed to employees for work performed that has not yet been paid.

Dividends

Payments made by a corporation to its shareholder members, usually derived from profits.

Accounts Receivable

Amounts due from customers for merchandise or services rendered by a corporation, still awaiting payment.

Utilities Expense

Costs incurred by a business for basic utilities such as water, electricity, gas, and sewage services.