The inventory turnover ratio is used to evaluate inventory purchasing decisions with, for example, a high inventory turnover ratio indicating that stockouts (empty shelves) could be occurring.

Question

Quizplus · Accepted Answer

A high inventory turnover ratio indicates that a company is selling and restocking its inventory quickly, which could indeed lead to stockouts if the inventory is not managed carefully and replenished in a timely manner.

The Inventory Turnover Ratio Is Used to Evaluate Inventory Purchasing