inventory turnover and current ratio are related The combination of a high current ratio and a low inventory turnover ratio, relative to industry norms, suggests that the firm has an above-average inventory level and/or that part of the inventory is obsolete or damaged.

Question

Quizplus · Accepted Answer

This statement is true as a high current ratio indicates a company's ability to pay off its short-term liabilities while a low inventory turnover ratio suggests that the company is not selling its inventory quickly enough. A combination of the two could indicate that the company is holding onto too much inventory, possibly including obsolete or damaged items.

Inventory Turnover and Current Ratio Are Related the Combination of a High