Answer (D) is correct . Cost of goods sold is the numerator of the inventory turnover ratio and average inventory is the denominator. A decrease in the numerator accompanied by an unchanged denominator results in a decrease in the overall ratio. Net credit sales is the numerator of the receivables turnover ratio and average net receivables is the denominator. A decrease in the numerator and an increase in the denominator result in a decrease in the overall ratio.
Answer (A) is incorrect because The numerators of both ratios have decreased, leading to decreases in both ratios.
Answer (B) is incorrect because The inventory turnover ratio decreased also.
Answer (C) is incorrect because The receivables turnover ratio decreased also.
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