A high inventory turnover ratio is good because it indicates that:
A) a firm can continue its daily operations with a small amount of inventory on hand.
B) it is easier for a firm to pay its short-term debts.
C) a firm's customers are paying for their purchases more quickly.
D) a firm produces a larger return to shareholders than investment by the stockholders.

Question

Quizplus · Accepted Answer

A high inventory turnover ratio indicates that a firm is efficiently managing its inventory, selling goods quickly, and thus can operate with less inventory on hand.

A High Inventory Turnover Ratio Is Good Because It Indicates