Question

At the end of the third quarter, a department store is showing lower cash flows and lower sales on its financial statements compared to the average of the previous four quarters. It also shows an increase in inventory compared to the second quarter. Which of the following options is MOST likely to be the cause?
A. Seasonality
B. Depreciation
C. In Decline Stage
D. Efficiency

Answer 1

Answer:

The correct answer is A. Seasonality .

Explanation:

Seasonality in this case refers to the drop in sales in a certain period of time. This phenomenon occurs as a consequence of external variables that directly affect people's purchasing decision. There are products that are sold more in certain seasons of the year than in others, and in that case it is important that the company has the ability to diversify its product offering so that absorption can occur and there is no strong impact on results.