Use the Information Below to Answer the Following Questions

question 50

Multiple Choice

Use the information below to answer the following questions:
Unstable Ltd has decided to change its depreciation method from straight-line to reducing balance, with the agreement of its auditors and taxation authorities. As a result, its annual depreciation expense increases by $200,000. The company’s income tax rate is 40%.
-What is the effect on the inventory turnover ratio?

• A) It increases.
• B) It decreases.
• C) There is no effect.
• D) It cannot be determined from the information provided.

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