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Basic Accounting MCQs
What is Activity Ratio?
12. What is Activity Ratio?
- Financial Ratios that measure a firm's ability to convert different accounts into a balance sheet.
- Ratios that measure a company's ability to pay debt obligations and its margin of safety.
- Financial measurements that assess the ability of a company to meet its financial obligations
- The ratio that evaluates the company's ability to generate income as compared to its expenses.
Answer: A) Financial Ratios that measure a firm's ability to convert different accounts into a balance sheet
Explanation:
Activity Ratios are a category of financial ratios that measure a firm's ability to convert different accounts within its balance sheets into cash or sales.