A reduction in inventory would increase inventory turnover,which means an increase in that organization's return on assets

Question

Quizplus · Accepted Answer

This is true because a higher inventory turnover ratio (calculated as Cost of Goods Sold divided by Average Inventory) indicates that a company is selling its inventory more quickly and efficiently. This means that there is less cash tied up in inventory, so the company can invest that cash in other areas, which could ultimately lead to higher return on assets (ROA).

A Reduction in Inventory Would Increase Inventory Turnover,which Means an Increase