Activity and Efficiency Ratios
Efficiency ratios, often called activity ratios, are used by analysts to assess a company's performance during the short term or present period. These ratios offer important information about how well a business uses its assets and resources to produce income and run its business. Analysts may obtain a thorough grasp of the company's inventory control, operational efficiency, and use of assets like accounts receivable and payable by looking at a variety of efficiency ratios. As a result, they are better equipped to evaluate the company's overall financial standing as well as its capacity to fulfill its current commitments and operational objectives.