The correct answer is: A. Activity Ratio.
An inventory turnover ratio is a measure of how efficiently a company manages its inventory. It is calculated by dividing the cost of goods sold by the average inventory. A higher inventory turnover ratio indicates that a company is selling its inventory more quickly, which can be a sign of good management. However, a high inventory turnover ratio can also indicate that a company is not carrying enough inventory to meet customer demand.
Activity ratios are a type of financial ratio that measures how efficiently a company uses its assets. Other examples of activity ratios include the receivables turnover ratio and the payables turnover ratio.
Profitability ratios measure a company’s ability to generate profits. Some examples of profitability ratios include the gross profit margin, the operating profit margin, and the net profit margin.
Solvency ratios measure a company’s ability to repay its debts. Some examples of solvency ratios include the debt-to-equity ratio and the debt-to-assets ratio.
Liquidity ratios measure a company’s ability to meet its short-term obligations. Some examples of liquidity ratios include the current ratio and the quick ratio.