Answer (C) is correct . Like most ratios involving working capital, the working capital turnover (sales ¡Â average working capital) is a measure of liquidity, which is the ability to meet obligations as they mature. However, it is also an activity measure, and a high turnover is preferable.Answer (A) is incorrect because Working capital includes cash and inventory, neither of which involves collectibility.
Answer (B) is incorrect because Financial leverage concerns the relationship between the use of debt capital and equity capital.
Answer (D) is incorrect because Profitability measures incorporate costs as well as revenues, assets, and liabilities.
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