Which of the following statements regarding inventory measures is not true?
A) If the inventory turnover ratio increases, the days to sell measure decreases.
B) The days to sell measure can help managers make pricing and ordering decisions for inventory.
C) A higher inventory turnover ratio indicates that inventory is moving more quickly from purchase to sale.
D) It is rare for a company with a lower gross profit percentage to have a faster inventory turnover.

Question

Quizplus · Accepted Answer

This statement is not true as there can be situations where a company with a lower gross profit percentage has a faster inventory turnover. For example, a company with lower profit margins may choose to maintain lower inventory levels and turn over inventory more quickly in order to minimize carrying costs and increase cash flow.

Which of the Following Statements Regarding Inventory Measures Is Not