Which of the Following Statements Is CORRECT

question 20

Multiple Choice

Which of the following statements is CORRECT?

• A) if a firm increases its sales and cost of goods sold while holding its inventories constant, then, other things held constant, its inventory turnover ratio will decrease.
• B) a reduction in inventories held would have no effect on the current ratio.
• C) an increase in inventories would have no effect on the current ratio.
• D) if a firm increases its sales and cost of goods sold while holding its inventories constant, then, other things held constant, its inventory turnover ratio will increase.
• E) a reduction in the inventory turnover ratio will generally lead to an increase in the roe.

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