If cost of goods sold remains unchanged,an increase in the inventory turnover rate is indicative of:
A)a reduction in the cost of goods sold.
B)a decrease in inventory.
C)an increase in inventory.
D)an increase in sales revenue.

Question

Quizplus · Accepted Answer

An increase in inventory turnover rate means that the company is selling its inventory more quickly, which indicates a decrease in inventory. If the cost of goods sold remains unchanged, this means the company is generating more sales revenue without increasing its cost of goods sold.

If Cost of Goods Sold Remains Unchanged,an Increase in the Inventory