Suppose that a logistics manager is able to eliminate some unnecessary inventory, which reduces the value of current assets as well as total asset value. What is the corresponding impact on inventory turnover and return on assets?

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Quizplus · Accepted Answer

Eliminating unnecessary inventory increases inventory turnover because it reduces the average inventory level, leading to a higher turnover ratio. Return on assets increases because reducing unnecessary inventory lowers total assets, improving the efficiency of asset use.

Suppose That a Logistics Manager Is Able to Eliminate Some