The funds tied up in holding large inventories may have more profitable uses elsewhere in an organization.

Question

Quizplus · Accepted Answer

Holding large inventories ties up funds that could be used for other purposes such as investing in research and development, expanding the business or paying off debt. By reducing inventory levels, companies can free up cash and invest it in areas that can generate higher returns. Therefore, the statement is true.

The Funds Tied Up in Holding Large Inventories May Have