Answer (D) is correct . Turnover ratios are activity ratios that measure management’s efficiency in using assets. However, the number of days’ sales in receivables (days in the year divided by the receivables turnover ratio), also known as the average collection period, and other turnover ratios are a measure of liquidity because these statistics show how long it will take to turn inventory into cash.
Answer (A) is incorrect because Valuation is not measured.
Answer (B) is incorrect because Sales performance is measured by profitability ratios.
Answer (C) is incorrect because Profitability ratios measure a firm’s return on its investment. An example is earnings per share.
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