This question deals with "off balance sheet financing." Company A normally finances buying its inventory by borrowing on a bank line of credit. The bank has a security interest in the inventory. It is considering entering into an agreement with a financing institution under which Company A will formally sell its inventory to that institution for cash now, and agrees to buy the inventory back later (when the time comes to sell it to customers) for a higher price. If Company A is allowed to treat this inventory financing arrangement as a sale, rather than a borrowing, how will this affect its reported results? Its ratio of debt to equity will be lower Its cash will be higher Its fixed asset turnover will be higher Its working capital will be lower