An unexpected increase in inventories has a negative effect on future production.

Question

Quizplus · Accepted Answer

An unexpected increase in inventories indicates that the demand for a company's products is not as high as expected. This can lead to a decrease in future production as the company may slow down or stop production until the excess inventory is sold. Additionally, the company may need to discount prices or take other measures to clear out the excess inventory, which can impact profits and cash flow. Therefore, an unexpected increase in inventories generally has a negative effect on future production.

An Unexpected Increase in Inventories Has a Negative Effect on Future