Final answer:
A 10% increase in inventory levels during the fourth quarter could indicate good news if linked to rising sales and consumer demand, but context is key to interpreting this change. Without context, it's not possible to definitively categorize this as either good or bad.
Step-by-step explanation:
When considering the statement that inventory levels increased by 10% at a company during the fourth quarter, it's essential to evaluate the context to determine whether this is good or bad news for the company. Answer B suggests that this could be good news if the company is ordering more goods because sales appear to be rising. This reflects a scenario where increased inventory levels are in response to increased consumer demand, hinting at positive business growth and potential for higher profits. Conversely, answer D suggests that higher inventories mean higher costs, which could be bad news. However, this statement lacks context, as higher inventories might also mean that the company is preparing for a busy season or that it's benefitting from cost reductions in input costs, allowing it to store more goods at a lower expense. Finally, answer C mentions a potential drawback if the increase in goods ordered is due to falling unit costs, which could indicate a less favorable market condition or overproduction.