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Inventory Turnover Ratio

A high invent...

Question

A high inventory turnover may indicate ___

A

company is selling its products fast and that there’s demand for their product

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B

a high risk of stock-outs

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C

a low profit margin

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D

Both :

company is selling its products fast and that there’s demand for their product

a high risk of stock-outs

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Solution

The correct option is D
Both :

company is selling its products fast and that there’s demand for their product

a high risk of stock-outs

A higher inventory turnover ratio could mean either of two things.

i) A company is selling its products fast and that there’s demand for their product

ii) A high risk of stock-outs

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