Question

Ratios that are calculated for measuring the efficiency of operations of business based on effective utilisation of resources are called :

• A. Activity Ratios
• B. Profitability Ratios
• C. Solvency Ratios
• D. Liquidity Ratios

Hint:

Activity Ratios are also known as efficiency or turnover ratios, focusing on the utilisation of assets and resources.

Answer 1

The Correct Option is A

Activity ratios assess a company's efficiency in leveraging assets and resources for revenue generation. Examples include Inventory Turnover Ratio and Debtors Turnover Ratio. These metrics aid in appraising management's operational effectiveness and capital deployment.