A low inventory turnover ratio demonstrates that the firm's inventory is liquid and its pricing policies are accurate.

Question

Quizplus · Accepted Answer

A low inventory turnover ratio indicates that the firm is not selling its inventory quickly enough, which could mean that the pricing policies are inaccurate or that the demand for the products is low. It can also lead to excess inventory and higher holding costs, which can negatively impact the firm's profitability.

A Low Inventory Turnover Ratio Demonstrates That the Firm's Inventory