Which of the Following Statements Best Describes Inventories

question 49

Multiple Choice

Which of the following statements best describes inventories?

• A) A reduction in inventories held would have no effect on the current ratio.
• B) An increase in inventories would have no effect on the current ratio.
• C) If a firm increases its sales while holding its inventories constant, then, other things held constant, its inventory turnover ratio will increase.
• D) A reduction in the inventory turnover ratio will generally lead to an increase in the ROE.