Question

Ratios that are calculated for measuring the efficiency of operations of the business based on effective utilization of resources are known as _______

• A. Profitability ratios
• B. Solvency ratios
• C. Turnover ratios
• D. Liquidity ratios

Answer 1

The Correct Option is C

The correct selection is (C) Turnover ratios.
Rationale: Turnover ratios assess a company's effectiveness in leveraging its assets to produce sales or income. Key examples of these ratios are:
Inventory Turnover Ratio – indicates the speed at which inventory is converted to sales.
Debtors Turnover Ratio – shows the pace of collecting outstanding customer payments.
Total Assets Turnover Ratio – measures the revenue generated per dollar of total assets. Generally, elevated turnover ratios signal superior operational performance.