Which of the following statements about inventory turnover is most appropriate?
A)A high ratio indicates the company is having trouble selling its inventory.
B)Companies generally strive to have the lowest possible inventory turnover ratio.
C)A low ratio generally means the company is not keeping enough inventory on hand.
D)The most profitable turnover ratio may not necessarily be the highest.

Question

Quizplus · Accepted Answer

The statement that "the most profitable turnover ratio may not necessarily be the highest" is the most appropriate. A very high inventory turnover rate may indicate that the company is not keeping enough inventory on hand to meet customer demand, which could lead to lost sales. On the other hand, a low inventory turnover rate may indicate that the company is carrying too much inventory, which could result in higher carrying costs. Therefore, finding the most profitable turnover ratio involves finding a balance between carrying costs and lost sales.

Which of the Following Statements About Inventory Turnover Is Most