Which of the Following Ratios Is Most Useful in Evaluating

question 79

Multiple Choice

Which of the following ratios is most useful in evaluating liquidity?

• A)Acid-test ratio.
• B)Return on equity.
• C)Profit marginy ratio.
• D)Asset turnover.

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Definitions:

Direct Labor

The labor or workforce directly involved in the production of goods or providing services, considered a variable cost in manufacturing.

Factory Overhead

All indirect costs incurred during the production of goods, such as utilities, depreciation, and salaries of maintenance employees.

Direct Materials

Basic substances used in the direct creation of particular products or services.

Lubricants

Substances introduced between surfaces to reduce friction and wear, often essential for the smooth operation of machinery.