Which of the Following Statements Is CORRECT

question 51

Multiple Choice

Which of the following statements is CORRECT?

• A)A reduction in inventories 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.
• E)If a firm increases its sales while holding its inventories constant, then, other things held constant, its fixed assets turnover ratio will decline.

---

Definitions:

Disruptive Innovation

Innovation that creates products or services that become so widely used that they largely replace prior practices and competitors.

Market Share

The percentage of an industry's total sales that is earned by a particular company over a specified time period.

New Behaviours

Recently adopted actions or patterns of activity by an individual or group, often in response to changes in the environment or circumstances.

Product Development

The creation of new products or the improvement of existing products, including design, development, and marketing phases.