The Corner Hardware Has Succeeded in Increasing the Amount of Goods

question 85

Multiple Choice

The Corner Hardware has succeeded in increasing the amount of goods it sells while holding the amount of inventory on hand at a constant level. Assume that both the cost per unit and the selling price per unit also remained constant. This accomplishment will be reflected in the firm's financial ratios in which one of the following ways?

• A) Decrease in the inventory turnover rate
• B) Decrease in the net working capital turnover rate
• C) Increase in the fixed asset turnover rate
• D) Decrease in the day's sales in inventory
• E) Decrease in the total asset turnover rate

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Definitions:

Finished Goods Inventory

Items that have completed the manufacturing process but have not yet been sold to customers.

Jobs Completed

Refers to work or projects that have been fully finished or executed, especially in a manufacturing or service-oriented business context.

Process Cost System

A method of accounting used by companies that produce similar or identical goods continuously, allocating production costs to products based on the process they go through.

Breakfast Cereal

A processed food made from cereal grains and typically eaten as a first meal of the day with milk.