Firms that successfully increase their inventory turnover ratio will, among other things,

Question

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Increasing the inventory turnover ratio means that the firm is selling its inventory more quickly. This leads to a decrease in inventory holding costs, which in turn reduces the firm's borrowing needs as it requires less working capital. So, Choice (A) is the correct answer. Choice (B) is incorrect because decreasing dividend payments does not necessarily relate to inventory turnover. Choice (C) is not correct because an increase in inventory turnover indicates improved financial health and a reduced credit risk, so suppliers may offer better credit terms. Choice (D) is not correct because an increase in inventory turnover reduces the need for high balances in cash accounts, as the firm generates more cash from operations.

Firms That Successfully Increase Their Inventory Turnover Ratio Will, Among