Which of the Following Statements Is CORRECT

question 12

Multiple Choice

Which of the following statements is CORRECT?

• A) A reduction in inventories will have no effect on the current ratio.
• B) An increase in inventories will 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.
• E) If a firm increases its sales while holding its inventories constant,then,other things held constant,its fixed assets turnover ratio will decline.