If the inventory turnover ratio is very low relative to industry averages:
A) the firm may have too many items that the customers probably do not want.
B) the firm has good total assets management practices.
C) the firm has too low a level of inventory.
D) the firm may be losing sales if its inventory is too low.

Question

Quizplus · Accepted Answer

A low inventory turnover ratio compared to industry averages suggests that the firm might be holding onto inventory too long, possibly because it has too many items that are not in demand by customers. This can indicate poor inventory management and an inability to match supply with customer demand.

If the Inventory Turnover Ratio Is Very Low Relative to Industry