Companies with higher inventory turnover ratios tend to have lower inventory costs,including lower inventory storage and insurance costs,than companies with lower inventory turnover ratios.

Question

Quizplus · Accepted Answer

This statement is generally true. A higher inventory turnover ratio indicates that a company is selling its inventory quickly, which means it is holding less inventory for a shorter period of time. As a result, the company has less inventory to store and less inventory to insure, which can lead to lower inventory costs.

Companies with Higher Inventory Turnover Ratios Tend to Have Lower