- Financial Accounting & Bookkeeping
- Purchases, Inventory and Cost of Goods Sold (COGS)
Inventory turnover ratio for Neir Company
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In a comparison of 2005 to 2004 performance, Neir Company's inventory turnover increased substantially, although sales and inventory amounts were essentially unchanged.
Which of the following statements best explains the increases inventory turnover ratio?
1. Cost of goods sold decreased.
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2. Accounts receivable turnover increased.
3. Total asset turnover increased.
4. Gross profit percentage decreased,
the answer is 4
Inventory turnover ratio = Cost of goods sold/Average ...
The solution explains which of the given statements best explains the increases inventory turnover ratio.