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Financial Ratios- Multiple Choice Question

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Management's use of resources can best be evaluated by focusing on measures of:
A. Liquidity
B. Activity
C. Leverage
D. Book Value

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The solution answers and explains a multiple choice question on financial ratios.

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Answer: B. Activity

Leverage ratios show how deeply the company is in debt. Overall the leverage or solvency ratios indicate the relative size of the claims of long-term creditors, compared to the claims or property rights of owners. Hence the leverage ratios indicate the method of ...

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