An inventory turnover ratio of 7.2 compared to an industry average of 5.1 is lik
ID: 2636767 • Letter: A
Question
An inventory turnover ratio of 7.2 compared to an industry average of 5.1 is likely to indicate that
the firm has higher sales than the industry average.
the firm is selling a product mix that includes more high margin items.
the firm's products are in inventory for fewer days before they are sold than is average for the industry.
the firm is managing its inventory inefficiently.
A.the firm has higher sales than the industry average.
B.the firm is selling a product mix that includes more high margin items.
C.the firm's products are in inventory for fewer days before they are sold than is average for the industry.
D.the firm is managing its inventory inefficiently.
Explanation / Answer
c. the firm's products are in inventory for fewer days before they are sold than is average for the industry.
Reason: Inventory turnover ratio indicates that how fast inventory are converting in sales. A higher ratio means inventory are converting fast and unsold inventory remains for less days.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.