You are the new controller at Ralston Industries and you have noticed that the company seems to carry a lot of inventory, both in direct materials and in finished goods. At a recent management meeting, you raised this observation. The managers agreed with your observation but stated that it was company policy to carry large inventories.
Required:
What reasons might these managers offer in support of carrying large inventories?

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The Answer of You are the new controller at Ralston Industries and you have noticed that the company seems to carry a lot of inventory, both in direct materials and in finished goods. At a recent management meeting, you raised this observation. The managers agreed with your observation but stated that it was company policy to carry large inventories.
Required:
What reasons might these managers offer in support of carrying large inventories?

You Are the New Controller at Ralston Industries and You