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.

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Definitions:

Ample Discretion

Sufficient freedom or authority given to individuals to make decisions and choices based on their judgement.

Innovative Leadership

Leadership that encourages and implements novel ideas, processes, and solutions to foster growth and solve problems.

Major Change

Significant alterations or transformations in processes, structures, or conditions within an organization or environment.

Success Verification

The process of confirming or validating that the desired outcome or success has been achieved.