Which of the Following Ratios Does NOT Measure Efficiency or Activity

question 5

Multiple Choice

Which of the following ratios does NOT measure efficiency or activity of an entity?

• A) Accounts receivable turnover
• B) Age of accounts receivable
• C) Net cash flow to current liabilities
• D) Times interest earned

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Definitions:

Costing Method

The technique or approach used by a business to determine the cost associated with a product or project.

Inventory Turnover

A ratio indicating how often a company sells and replaces its stock of goods within a certain period, reflecting the efficiency of inventory management.

Cost of Goods Sold

The total cost associated with making or purchasing the products that a company sells during a period.

Ending Inventory

The worth of merchandise ready for sale at the conclusion of an accounting cycle, determined by adding beginning inventory to purchases and subtracting the cost of goods sold.