The sales of SportCheck have increased recently and inventory has declined slightly. A ﬁnancial analyst would expect to ﬁnd that the:
A) Inventory turnover has increased and the days' sales in inventory has decreased.
B) Inventory turnover has decreased and the days' sales in inventory has decreased.
C) Inventory turnover has decreased and the days' sales in inventory has increased.
D) Inventory turnover has increased and the days' sales in inventory has increased.
E) Quick ratio has decreased and the current ratio has increased.

Question

Quizplus · Accepted Answer

When sales increase and inventory declines, it indicates that the product is selling faster and that there is less inventory left at the end of the period. This, in turn, means that inventory turnover (the number of times inventory is sold and restocked) increases and the days' sales in inventory (the number of days inventory is held before it is sold) decreases. Therefore, the correct choice is A. The other options are not consistent with the given information.

The Sales of SportCheck Have Increased Recently and Inventory Has