The Corner Hardware 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.This accomplishment will be reflected in the firm's financial ratios in which one of the following ways?
A)decrease in the inventory turnover rate
B)decrease in the net working capital turnover rate
C)no change in the fixed asset turnover rate
D)decrease in the day's sales in inventory
E)no change in the total asset turnover rate

Question

Quizplus · Accepted Answer

The success of increasing the amount of goods sold without increasing the amount of inventory on hand translates to a decrease in the number of days the inventory is held, which is reflected in the day's sales in inventory ratio. Therefore, a decrease in the day's sales in inventory is the correct answer. The other options are not affected by changes in inventory levels.

The Corner Hardware Has Succeeded in Increasing the Amount of Goods