Other things remaining the same, if the cost of goods sold decreases, then
A) inventory turnover ratio and weeks of supply will both go up.
B) inventory turnover ratio will go down, but the weeks of supply will go up.
C) inventory turnover ratio and weeks of supply will both go down.
D) inventory turnover ratio will go up, but weeks of supply will go down.
E) inventory turnover ratio will stay the same, but weeks of supply will go down.

Question

Quizplus · Accepted Answer

The inventory turnover ratio decreases because it is calculated as the cost of goods sold divided by average inventory. If the cost of goods sold decreases, the ratio decreases. Weeks of supply increases because it is inversely related to the inventory turnover ratio.

Other Things Remaining the Same, If the Cost of Goods