A disadvantage to a firm's having too high an asset turnover ratio is the ________.
A) high inventory holding costs
B) high quantity of stale merchandise on hand
C) loss of quantity discounts with suppliers
D) loss of bargaining power with suppliers

Question

Quizplus · Accepted Answer

A high asset turnover ratio indicates that a company is efficiently using its assets to generate sales. However, one potential disadvantage is the loss of quantity discounts with suppliers, as the company may not be purchasing in large enough quantities to qualify for these discounts.

A Disadvantage to a Firm's Having Too High an Asset