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 Company:
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, not increasing the amount of inventory on hand relative to sales.

Johnson Company Has a High Inventory Turnover That Has Increased