Breakers Bay Inc.has succeeded in increasing the amount of goods it sells while holding the amount of inventory on hand at a constant level.Assume that both the cost per unit and the selling price per unit also remained constant.All else held constant,how will this accomplishment be reflected in the firm's financial ratios?
A) decrease in the fixed asset turnover rate
B) decrease in the financial leverage ratio
C) increase in the inventory turnover rate
D) increase in the day's sales in inventory
E) no change in the total asset turnover rate

Question

Quizplus · Accepted Answer

An increase in the amount of goods sold while maintaining constant inventory levels will result in a higher inventory turnover rate, as this ratio measures how often inventory is sold and replaced over a period.