Inventory levels increase by 10% at your company during the fourth quarter.Based on this increase,which of the following statements must be correct?
A)This must be good news because inventories are an asset to the company.
B)This could be good news if the company is ordering more goods because sales appear to be rising.
C)This could be bad news if the company is ordering more goods because unit costs are falling.
D)This must be bad news because higher inventories mean higher costs.

Question

Quizplus · Accepted Answer

Ultimately,inventory management often comes down to purchasing goods that can be sold soon after they are acquired.As such,an increase in inventory levels could be good news if the company is ordering more goods because sales appear to be rising.

Inventory Levels Increase by 10% at Your Company During the Fourth