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Answer (B) is correct . Return on equity, in the most general terms, is the ratio of net income to total equity. Increasing inventory turnover raises the numerator, and decreasing equity financing lowers the denominator. This combination is thus the only effective means of increasing return on equity.

Answer (A) is incorrect because Increasing equity financing raises the denominator, lowering the overall return on equity ratio.
Answer (C) is incorrect because Decreasing inventory turnover lowers the numerator, lowering the overall return on equity ratio.
Answer (D) is incorrect because Decreasing inventory turnover lowers the numerator, lowering the overall return on equity ratio.