Accounting for IGCSE & O level - Advanced Principles (Section 3 - No. 8)
What happens to the inventory turnover ratio if a company reduces the amount of inventory it holds while maintaining the same level of sales?
It decreases.
It increases.
It stays the same.
It cannot be determined.
Paskaidrojums
If the same amount of products sold, and the inventory goes down, then the ratio increases.