Regarding markups and turnover:
A) supermarket operators have found that high-margin products are generally more profitable than low-margin products.
B) higher markups always lead to higher profits.
C) low stockturn rates increase costs by tying up working capital in inventory.
D) to earn higher profits, all firms should lower their markups and seek faster turnover.
E) None of these alternatives is correct.

Question

Quizplus · Accepted Answer

Low stockturn rates tie up working capital in inventory, leading to increased costs. Therefore, firms should aim for faster turnover to reduce costs and increase profitability. While high-margin products may be more profitable in some cases, it is not always the case (option A). Higher markups do not always lead to higher profits, as it depends on the demand for the product and the competitive landscape (option B). Lowering markups may not always lead to higher profits, as it could also result in lower revenue (option D). Thus, option C is the best choice for this question.

Regarding Markups and Turnover