Which of the following generally indicates a positive change?
A)Earnings per share decreases.
B)The debt service coverage decreases.
C)The acid-test ratio decreases.
D)The number of days' sales in inventory decreases.

Question

Quizplus · Accepted Answer

The decrease in the number of days' sales in inventory indicates that the company is selling its inventory faster, which is generally seen as a positive change. A lower number of days' sales in inventory means that the company is able to manage its inventory efficiently and turn it into cash more quickly. In contrast, A, B, and C indicate negative changes: a decrease in earnings per share, debt service coverage, and the acid-test ratio all suggest reduced financial health and stability.

Which of the Following Generally Indicates a Positive Change