Question

______ ratios indicate the speed at which activities of the business are being performed.

Options

• Liquidity

• Solvency

• Profitability

• Activity

Answer 1

Activity ratios indicate the speed at which activities of the business are being performed.

Explanation:

Activity ratios, also known as turnover or efficiency ratios, indicate the speed or rapidity with which the various assets and activities of a business are being performed and converted into sales or cash. These ratios measure how effectively and efficiently a company uses its resources, such as inventory or accounts receivable. A higher turnover rate generally implies that the business is running its operations briskly, managing its working capital efficiently, and generating revenue faster from its investments.