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Question
______ ratios are a measure of the speed with which various accounts are converted into revenue from operations or cash.
Options
Activity
Liquidity
Debt
Profitability
MCQ
Fill in the Blanks
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Solution
Activity ratios are a measure of the speed with which various accounts are converted into revenue from operations or cash.
Explanation:
Activity (or turnover) ratios measure how quickly a firm’s assets and accounts like inventory and receivables are converted into revenue from operations or into cash; examples include inventory turnover and trade receivables turnover, which indicate the speed of conversion and efficiency of asset use.
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