When Tri-C Corp. compares its ratios to industry averages, it has a higher current ratio, an average quick ratio, and a lower inventory turnover. What might you assume about Tri-C?
A) Its cash balance is too low.
B) Its cost of goods sold is too low.
C) Its current liabilities are too low.
D)Its average inventory is too high.

Question

Quizplus · Accepted Answer

Tri-C Corp.'s lower inventory turnover ratio suggests that it may be holding onto inventory for longer than its industry peers. This could be due to factors such as slower sales or higher inventory levels, which would in turn suggest that Tri-C Corp.'s average inventory is too high.