In the context of activity ratios, a rise in a firm's rate of inventory turnover indicates that the firm is moving closer to a just-in-time system of inventory management.

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An increase in inventory turnover means that the firm is selling its inventory more quickly, and thus holding less inventory at any given time. Just-in-time inventory management aims to hold as little inventory as possible, so a higher inventory turnover rate indicates that the firm is moving closer to that goal.

In the Context of Activity Ratios, a Rise in a Firm's