When Is a Productivity Ratio Less Important to Analyze

question 51

Multiple Choice

When is a productivity ratio less important to analyze?

• A) There is a definitive historical trend in the productivity ratio.
• B) The company's productivity is very different from its competitors.
• C) The company experiences large volatility in the ratio.
• D) The company has relatively low levels of the account in the productivity ratio's denominator.

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Definitions:

Compensating Balance

A minimum account balance that a borrower is required to maintain with a lender, which can reduce the effective amount of loan available to the borrower.

Cash Balances

The total amount of cash in a company's account at any given time, which can be used for transactions or as a reserve.

Receivables Financing

A form of financing where a company uses its outstanding invoices or receivables as collateral to secure a loan or advance.

Administrative Fee

Charges imposed by investment funds or companies to cover operational and management expenses.