Which of the following actions would most likely cause the inventory turnover ratio to increase?
A)Increasing the average inventory kept on hand.
B)Maintaining the same average inventory kept on hand and increasing the volume of sales.
C)Increasing the average inventory kept on hand and increasing the volume of sales.
D)Maintaining the same average inventory kept on hand and decreasing the volume of sales.

Question

Quizplus · Accepted Answer

The inventory turnover ratio equals cost of goods sold divided by average inventory.The inventory turnover ratio could be increased by increasing cost of goods sold through increased sales volume,reducing the average inventory,or both actions.

Which of the Following Actions Would Most Likely Cause the Inventory