Johnson Company has a high inventory turnover that has increased over the last year. All of the following statements are true regarding this situation except Johnson County:
A) is minimizing funds tied up in inventory.
B) is increasing the amount of inventory on hand relative to sales.
C) may be losing sales due to inventory shortages.
D) has a cost of goods sold that is increasing relative to its average inventory.

Question

Quizplus · Accepted Answer

A high inventory turnover indicates that the company is selling and replacing its inventory quickly, which means it is not increasing the amount of inventory on hand relative to sales.

Johnson Company Has a High Inventory Turnover That Has Increased