Which of these would cause the inventory turnover ratio to increase the most?
A)Increasing the amount of inventory on hand.
B)Keeping the amount of inventory on hand constant but increasing sales.
C)Keeping the amount of inventory on hand constant but decreasing sales.
D)Decreasing the amount of inventory on hand and increasing sales.

Question

Quizplus · Accepted Answer

Decreasing inventory while increasing sales would lead to a higher inventory turnover ratio, as the ratio is calculated by dividing sales by the average inventory.

Which of These Would Cause the Inventory Turnover Ratio to Increase