Which of the following is a relevant financial performance metric? Select one.

• A. Current Ratio
• B. Gross Domestic Product
• C. Market Share
• D. Employee Turnover Rate

Answer: (A)

Verified step by step guidance

1. Understand the concept of financial performance metrics: Financial performance metrics are quantitative measures used to assess a company's financial health and operational efficiency. They are typically derived from financial statements and are relevant for decision-making.
2. Analyze the options provided: Current Ratio, Gross Domestic Product, Market Share, and Employee Turnover Rate. Determine which of these is directly related to financial performance.
3. Define the Current Ratio: The Current Ratio is a financial metric that measures a company's ability to pay its short-term liabilities with its short-term assets. It is calculated using the formula: $\frac{\mathrm{Current Assets}}{\mathrm{Current Liabilities}}$. This is a relevant financial performance metric.
4. Evaluate the other options: Gross Domestic Product (GDP) measures the economic performance of a country, not a company. Market Share is a business metric related to competitive positioning, and Employee Turnover Rate is a human resources metric, neither of which are financial performance metrics.
5. Conclude that the Current Ratio is the correct answer because it directly assesses a company's financial health and is widely used in financial analysis.