CFA Practice Question
Inventory turnover and debt/equity ratios are measures of ______.
A. operating performance and operating efficiency, respectively
B. operating efficiency and financial risk, respectively
C. liquidity and financial risk, respectively
Explanation: Inventory turnover is a measure of efficiency and debt/equity is a measure of financial risk.
User Contributed Comments 4
| User | Comment |
|---|---|
| danlan | Operational efficiency ratios are all related to asset or equity. |
| MattNYC | According to the CFA, Inventory TO is an activity ratio. There are 5 Liquidity Ratios: 1.) Current 2.) Cash 3.) Quick 4.) Defensive 5.) CCC (DOH+DOS-payables) |
| shis | Check page 583/584 of Vol 3: Activity ratios are operating efficiency rations and inventory turnover is listed as one of the Activity ratios. So answer B is correct. |
| jpducros | What do you call Defensive Ratio ? |