A firm is conducting an analysis of trends over time and discovers that its inventory turnover has declined.This may be due to [blank].
A)an increase in sales
B)an increase in cost of goods sold
C)an increase in inventory purchases
D)a decrease in inventory purchases

Question

Quizplus · Accepted Answer

An increase in inventory purchases without a corresponding increase in sales can lead to a higher inventory level, which reduces inventory turnover. This is because inventory turnover is calculated as the cost of goods sold divided by the average inventory, so if inventory increases while sales remain constant or do not increase proportionally, turnover will decline.

A Firm Is Conducting an Analysis of Trends Over Time