A low inventory turnover ratio might indicate that:
A)the firm is using the last-in first-out (LIFO) method of inventory valuation during inflationary periods.
B)the cost of inventory of the firm is lower than that of the similar firms.
C)the firm is holding excess stocks of inventory.
D)the inventory of the firm is sold and restocked very often.
E)the firm purchases all its inventory on credit.

Question

Quizplus · Accepted Answer

A low inventory turnover ratio means that the company is holding onto its inventory for a longer period of time, which could indicate that it is holding excess stocks of inventory. This could be due to slow sales, poor inventory management, or an inability to accurately forecast demand.

A Low Inventory Turnover Ratio Might Indicate That