Question

Bell Co. changed from a traditional manufacturing philosophy to a just-in-time philosophy. What are the expected effects of this change on Bell’s inventory turnover and inventory as a percentage of total assets reported on Bell’s balance sheet?

A. Decrease， Decrease
B. Decrease ，Increase
C. Increase， Decrease
D. Increase， Increase

Answer 1

C. Increase， Decrease

Step-by-step explanation:

Inventory turnover is increased because there are very low or almost nill Closing inventorya as we divide the cost of goods sold with a lower number. Inventory as a percentage to total asset will be decrease because there will be a lower value ofinventory in the balance sheet. Comparing it with total value of asset tells us the percentage of total asset.