XYZ Company has an inventory turnover of 20 times per year.The industry average is 5.0 times per year.What does a high inventory turnover mean?
A)The company has too much inventory on hand.
B)The company may have obsolete inventory on hand.
C)The company may not be keeping enough inventory on hand which can lead to lost sales.
D)The company is having a difficult time selling the inventory.

Question

Quizplus · Accepted Answer

A high inventory turnover means that the company is selling its inventory quickly, which can indicate a healthy and efficient business. However, it can also mean that the company is not keeping enough inventory on hand, which can lead to lost sales if there is a sudden increase in demand.

XYZ Company Has an Inventory Turnover of 20 Times Per