Explaining inventory turnover


Question:

Inflation can have significant effects on income statements and balance sheets, and therefore on the calculation of ratios. Discuss the possible impact of inflation on the following ratios, and explain the direction of the impact based on your assumptions. (LO5)

a. Return on investment

b. Inventory turnover

c. Fixed asset turnover

d. Debt-to-assets ratio

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Accounting Basics: Explaining inventory turnover
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