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    Decline in Inventory Turnover

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    A firm is conducting an analysis of trends over tiem and discovers that its inventory turnover has declined. This may be due to:

    a. an increase in sales b. an increase in cost of goods sold
    c. an increase ininventory purchases d. a decrease in inventory purchases

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    Solution Preview

    The inventory turnover ratio is represented by this formula:

    Turnover = Sales ...

    Solution Summary

    This solution explains how to determine the cause of a decline in inventory turnover.