Which of the Following Ratios Measure How Efficiently a Firm

question 68

Multiple Choice

Which of the following ratios measure how efficiently a firm uses its assets, as well as how efficiently the firm manages its accounts payable?

• A) asset management
• B) cash
• C) internal-growth
• D) quick or acid-test

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Definitions:

Scenario Analysis

A process of analyzing future events by considering alternative possible outcomes (scenarios), often used in the assessment of risk or strategic planning.

NPV

Net Present Value, a calculation used to estimate the profitability of an investment or project by summing the present values of all expected future cash flows.

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 1 indicates certainty.

Capital Budgeting

The process by which a business evaluates and selects long-term investments that are expected to yield returns over a period of time.