Which of the following results is generally considered favorable?
A)A large decrease in the accounts receivable turnover ratio
B)An increase in the inventory turnover ratio
C)An increase in sales along with a larger decrease in the gross profit percentage.
D)A decrease in the operating cash flow ratio

Question

Quizplus · Accepted Answer

an increase in the inventory turnover ratio means that the company is selling its inventory more efficiently, which is generally considered favorable. A decrease in the accounts receivable turnover ratio (choice A) would mean that the company is taking longer to collect payments from its customers, which is not favorable. An increase in sales with a larger decrease in the gross profit percentage (choice C) may indicate that the company is generating higher revenue, but its profit margins are decreasing, which may not be sustainable in the long run. A decrease in the operating cash flow ratio (choice D) would mean that the company is generating less cash from its operations, which is not favorable.

Which of the Following Results Is Generally Considered Favorable