Which of the Following Ratios Is the Best Measure for Analyzing

question 211

Multiple Choice

Which of the following ratios is the best measure for analyzing a company's efficiency in using assets to produce sales revenues?

• A)current ratio
• B)return on assets
• C)asset turnover ratio
• D)debt-to-total assets ratio

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Definitions:

Recognized Gain

The amount of profit realized from the sale or exchange of an asset that must be reported for tax purposes.

Cash Distribution

The payment of cash to shareholders or partners as part of the profits or surplus.

Self-employment Income

Income derived from running a business as a sole proprietor, independent contractor, or freelancer, as opposed to earning a salary or wages from an employer.

Section 179 Expense

A section of the IRS tax code allowing businesses to deduct the full purchase price of qualifying equipment and/or software within a tax year.