Which of the Following Statements Is CORRECT

question 2

Multiple Choice

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.

---

Definitions:

Unidirectional Flow

A transmission mode where signals or data travel in a single direction from origin to destination, without feedback or interaction from the receiver.

Periphery

Often relates to the outer limits or edge of an area or object, but in business or economics, it can refer to markets or activities that are not the primary focus of a company's operations.

Affluent Centre

A term referring to areas or regions marked by high income and wealth, often focused on in marketing for their purchasing power.

Multi-Directional Flows

In the context of communication or information, it refers to the exchange of messages or data in multiple directions rather than a singular flow.