The correct answer is C. Activity ratio.
Activity ratios measure how efficiently a company uses its assets to generate sales. They are also known as turnover ratios. Some common activity ratios include the inventory turnover ratio, accounts receivable turnover ratio, and days sales outstanding.
Liquidity ratios measure a company’s ability to meet its short-term obligations. They are calculated by dividing a company’s current assets by its current liabilities. Some common liquidity ratios include the current ratio and the quick ratio.
Leverage ratios measure a company’s financial risk. They are calculated by dividing a company’s debt by its equity. Some common leverage ratios include the debt-to-equity ratio and the debt-to-assets ratio.
Profitability ratios measure a company’s ability to generate profits. They are calculated by dividing a company’s net income by its revenue. Some common profitability ratios include the return on assets (ROA), the return on equity (ROE), and the return on investment (ROI).