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What does activity ratio show? - Accounts

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Question

What does activity ratio show?

Short Answer
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Solution

Activity ratios measure how effectively a company uses its assets to create revenue. They contribute to operational efficiency by examining how quickly inventory is sold, how successfully receivables are recovered, and how well assets are used to generate sales. A higher activity ratio typically suggests better asset management, whilst a lower ratio may indicate inefficient resource usage.

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Chapter 15: Project Work - PROJECT WORK PROBLEMS [Page P-65]

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D. K. Goel Accountancy Volume 1 and 2 [English] Class 12 ISC
Chapter 15 Project Work
PROJECT WORK PROBLEMS | Q 38. | Page P-65
D. K. Goel Accountancy Volume 1 and 2 [English] Class 12 ISC
Chapter 14 Ratio Analysis
SHORT ANSWER QUESTIONS | Q 54. | Page 14.110
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