Question

Which of the following are known as Efficiency Ratios?

Options

• Liquidity Ratios

• Solvency Ratios

• Activity Ratios

• Profitability Ratios

Answer 1

Activity Ratios

Explanation:

Activity Ratios, also widely known as efficiency or turnover ratios, evaluate how productively a company utilises its operational assets and resources. They track how quickly and often core business elements like inventory, trade receivables, and fixed assets convert into sales revenue or cash inflows. Higher turnover indicates stronger day-to-day resource management, better working capital deployment, and more efficient overall operations.