In Comparison of 2010 to 2009 Performance,Watson Company's Inventory Turnover

question 43

Essay

In comparison of 2010 to 2009 performance,Watson Company's inventory turnover decreased substantially,although sales and inventory amounts were essentially unchanged.
Required:
During a corporate meeting you heard the following managers postulate why the decreased inventory turnover ratio happened.Which statement best explains the decreased inventory turnover ratio and why?
a.The marketing manager said: The decreased inventory turnover ratio is due to an increase in the cost of goods sold.
b.The operations manager said: The decreased inventory turnover ratio is due to increased gross profit percentage.
c.The credit manager said: The decreased inventory turnover ratio is due to a decrease in the accounts receivable turnover.
d.The shipping manager said: The decreased inventory turnover ratio is due to decreased total asset turnover.

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Definitions:

Inferior Oblique

A muscle in the eye that contributes to upward and outward eye movement.

Extrinsic Eye Muscles

Six muscles that control eye movement and position, enabling complex motions and stabilization of gaze.

Rotates

To turn or revolve around an axis or a center.

Facial Nerve

The seventh cranial nerve responsible for controlling most of the muscles of facial expression and conveying taste sensations from the anterior two-thirds of the tongue.