At Chips and Dips,a local convenience market,an increase in the inventory turnover ratio would indicate which of the following?
A)It is at risk of holding too much inventory.
B)It is more likely to face a cash flow problem.
C)It is selling its stock of merchandise more quickly.
D)It is relying heavily on credit sales.

Question

Quizplus · Accepted Answer

An increase in the inventory turnover ratio indicates that the store is selling its stock of merchandise more quickly. This means that items are not staying on the shelves for too long, which is a positive sign for the business. It also means that inventory is not staying in the store for too long, the business is able to replenish its stock quickly, and it is not at risk of holding too much inventory. An increase in the inventory turnover ratio does not necessarily indicate that the business is relying heavily on credit sales or is more likely to face a cash flow problem.

At Chips and Dips,a Local Convenience Market,an Increase in the Inventory