A manufacturer reported an inventory turnover ratio of 8.6 during 2016. During 2017, management introduced a new

Question:

A manufacturer reported an inventory turnover ratio of 8.6 during 2016. During 2017, management introduced a new inventory control system that was expected to reduce average inventory levels by 25 percent without affecting sales volume. Given these circumstances, would you expect the inventory turnover ratio to increase or decrease during 2017? Explain.

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...

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