Which of the following is true with regard to inventory turnover ratio?
A)Generally,the higher a firm's inventory turnover ratio,the less time its inventory spends in storage and,therefore,the more efficient is the firm's use of the inventory.
B)Generally,the lower a firm's inventory turnover ratio,the less time its inventory spends in storage and,therefore,the less efficient is the firm's use of the inventory.
C)Generally,the higher a firm's inventory turnover ratio,the less time its inventory spends in storage and,therefore,the less efficient is the firm's use of the inventory.
D)Generally,the lower a firm's inventory turnover ratio,the less time its inventory spends in storage and,therefore,the more efficient is the firm's use of the inventory.

Question

Quizplus · Accepted Answer

Inventory turnover ratio measures how quickly a company sells its inventory and replaces it with new inventory. Generally, a higher inventory turnover ratio indicates that a company is selling its inventory faster and replenishing it more frequently, which is a sign of efficient inventory management.

Which of the Following Is True with Regard to Inventory