Ratios That Measure How Effectively an Entity Is Using Is

question 76

Multiple Choice

Ratios that measure how effectively an entity is using is assets are called

• A) liquidity ratios.
• B) activity ratios.
• C) solvency ratios.
• D) profitability ratios.

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Definitions:

Firm Deposits

Deposits made by a firm that are typically fixed for a certain term or period, which might earn interest.

Bank Credits

The aggregate amount of credit available to a borrower from the banking system.

Net Present Value

A method of evaluating the profitability of an investment by calculating the difference between the present value of cash inflows and the present value of cash outflows over the investment's lifetime.

Variable Cost

Costs that vary in proportion to the volume of output or activity, such as materials and labor.