Everything Else Held Constant, Will an Increase in the Amount

question 118

Multiple Choice

Everything else held constant, will an increase in the amount of inventory on hand increase or decrease the firm's profitability?

• A) Decrease the profitability.
• B) Increase the profitability.
• C) It could either increase or decrease the profitability depending on net profit margins.
• D) It could either increase or decrease the profitability depending on the debt ratio.

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Definitions:

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