An unexpected economic downturn is likely to have which effect on inventory turnover.
A)Increase.
B)Decrease.
C)No effect.
D)Each of these replies is equally likely.

Question

Quizplus · Accepted Answer

An unexpected economic downturn is likely to lead to a decrease in inventory turnover because during a downturn, demand for goods and services decreases, causing businesses to reduce their production or even halt it altogether. This, in turn, leads to a build-up of inventory which takes longer to sell, resulting in a decrease in inventory turnover.

An Unexpected Economic Downturn Is Likely to Have Which Effect