A decline in a firm's inventory turnover ratio suggests that it is improving both its inventory management and its liquidity position,i.e. ,that it is becoming more liquid.

Question

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A decline in the inventory turnover ratio means that the firm is holding onto inventory for a longer period of time, which ties up its funds and makes it less liquid. Therefore, it suggests that the firm's inventory management and liquidity position are worsening, not improving.

A Decline in a Firm's Inventory Turnover Ratio Suggests That