Which of These Would Cause the Inventory Turnover Ratio to Increase

question 151

Multiple Choice

Which of these would cause the inventory turnover ratio to increase the most?

• A)Increasing the amount of inventory on hand.
• B)Keeping the amount of inventory on hand constant but increasing sales.
• C)Keeping the amount of inventory on hand constant but decreasing sales.
• D)Decreasing the amount of inventory on hand and increasing sales.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed.

Depreciate Equipment

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in the asset's value over time.

NOPAT

Net Operating Profit After Tax; a measure of company profitability that excludes the cost and benefits of financing and investments.

Net Cash Flows

The difference between a company's cash inflows and outflows over a specific period, showing the company's financial health and liquidity.