Assuming that longer inventory holding periods act to increase expenses, which of the three companies would be expected to have the lowest inventory holding costs? (Use 365 days in a year.)

Question

Quizplus · Accepted Answer

Company Y has the highest inventory turnover ratio, which means they sell their inventory faster than Company X and Z. This implies that Company Y holds their inventory for fewer days, and therefore would have lower inventory holding costs.

Assuming That Longer Inventory Holding Periods Act to Increase Expenses