A decrease in the inventory turnover ratio for a company from one year to the next could indicate all of the following except?
A)That inventory is obsolete.
B)That there is a falling demand for the inventory.
C)That the company has more money tied up in inventory.
D)That the company has been growing rapidly and expanding sales.

Question

Quizplus · Accepted Answer

A decrease in inventory turnover ratio indicates that a company is holding onto its inventory for a longer period of time. This could be due to various reasons, including obsolete inventory, falling demand, or more money tied up in inventory. However, it is unlikely to be due to rapid growth and expansion of sales, as this would typically result in a higher inventory turnover ratio.

A Decrease in the Inventory Turnover Ratio for a Company