Inventory turnover ratio shows how many times a firm turns over its inventory in an accounting period. Faster turnovers are generally viewed as negative because it indicates instability in the firm's inventory level. A) TrueB) False

Question

Penelope Smith

Business

10 July, 12:40

Inventory turnover ratio shows how many times a firm turns over its inventory in an accounting period. Faster turnovers are generally viewed as negative because it indicates instability in the firm's inventory level. A) TrueB) False

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Frederick · Answer 1

False

Explanation:

Yes the Inventory turnover shows how many times a firm turns over its inventory in an accounting period but Faster turnovers are not generally viewed as negative because it indicates instability in the firm's inventory level. Faster Inventory Turnover is a positive sign and it make the firm more stable than before. It shows how many time a company has sold the inventory in a specified period and how many times it has been sold. It shows the increase or decrease in the sales as well. Keeping other things constant more Inventory Turnover means more stability of the firm because their might be more profits and more net cash flows generated from the business.