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Question
Which of the following statements is CORRECT?a. If a firm increases its sales and cost of goods sold while holding its inventories constant, then, other things held constant, its inventory turnover ratio will decrease.
b. A reduction in inventories held would have no effect on the current ratio.
c. An increase in inventories would have no effect on the current ratio.
d. If a firm increases its sales and cost of goods sold while holding its inventories constant, then, other things held constant, its inventory turnover ratio will increase.
e. A reduction in the inventory turnover ratio will generally lead to an increase in the ROE.
Answer
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