Efficiency Ratios

question 73

Multiple Choice

Efficiency ratios:

• A) include the quick ratio, asset turnover ratio, and return on equity.
• B) are used to measure how well the company uses its assets.
• C) are used to measure how liquid the company is.
• D) measure the profits generated by a firm's equity and assets.

---

Definitions:

Depreciation Expense

The allocated amount of the cost of an asset that is written off as an expense over its useful life.

Sales Price

The sum of money that a purchaser spends to acquire a product or service from a vendor.

Contribution Margin

The revenue remaining after deducting variable costs, which can be used to cover fixed costs and contribute to profit.

Variable Costs

Costs that change in proportion to the level of production or business activity.