A retailer will have low asset turnover when it has ________.
A) a high proportion of slow-selling inventory
B) high financial leverage
C) a high profit margin
D) high debt relative to assets

Question

Quizplus · Accepted Answer

A low asset turnover indicates that the retailer is not efficiently using its assets to generate sales. When a retailer has a high proportion of slow-selling inventory, it means that its inventory turnover rate is low, which in turn reduces its asset turnover ratio.

A Retailer Will Have Low Asset Turnover When It Has