Which of the following is NOT a function of Funds Management Ratios?

Funds Management Ratios primarily focus on understanding how a company handles its resources, particularly in terms of liquidity, efficiency, and cost management. Each of the other options relates closely to the core functions of these ratios.

Analyzing operational efficiency typically involves assessing how well a company uses its assets and manages its operations to generate revenue. This is a key aspect of fund management through various ratios like inventory turnover or asset utilization ratios.

Assessing liquidity is crucial for understanding if a company can meet its short-term obligations. Funds Management Ratios often include metrics such as the current ratio and quick ratio, which provide insights into financial stability and the ability to pay off liabilities.

Identifying cost-saving opportunities falls under operational efficiency as well. By leveraging funds management ratios, a company can pinpoint areas where costs can be reduced or processes can be optimized to enhance financial performance.

In contrast, measuring return on equity (ROE) does not directly align with the functions of Funds Management Ratios. ROE is more closely related to profitability ratios, which evaluate how effectively a company is generating profit from shareholders' equity. Therefore, return on equity is not a function of funds management but rather a measure of overall financial performance and profitability. This distinction illustrates why this option correctly represents something that is