Breakers Bay Inc.has succeeded in increasing the amount of goods it sells while holding the amount of inventory on hand at a constant level.Assume that both the cost per unit and the selling price per unit also remained constant.All else held constant,how will this accomplishment be reflected in the firm's financial ratios?
A) decrease in the fixed asset turnover rate
B) decrease in the financial leverage ratio
C) increase in the inventory turnover rate
D) increase in the days' sales in inventory
E) decrease in the total asset turnover rate

Question

Quizplus · Accepted Answer

The increase in the amount of goods sold while holding the inventory level constant means that the inventory turnover rate will increase. This indicates that the company is efficiently managing its inventory, which is generally viewed positively by investors and lenders. The other answer choices are not directly impacted by the given scenario.