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Unformatted text preview: -No effect on inventory turnover, since both numerator and denominator are doubling-Total Asset Turnover would increase, but not double, since sales doubles, but total assets are increasing only according to the increasing amount of inventories and receivables-Net Profit Margin would decrease by half since sales, the denominator, is doubling-Return on Assets would decrease because total assets (denominator) is increasing from the doubling of the inventories and account receivables-Return on Equity would decrease by half because of the doubling of the common equity (the denominator)-Total Debt/Total Assets would decrease because of the increase in total assets as a result of doubling the inventories and the accounts receivables...
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This note was uploaded on 09/07/2011 for the course BMGT 340 taught by Professor White during the Spring '08 term at Maryland.
- Spring '08