Question

The lower a firm's inventory turnover, the longer it takes the firm to collect payment on its sales. a. faster the firm collects payment on its sales. b. faster the firm sells its inventory.c. longer inventory sits on the firm's shelves. d. smaller the amount of inventory held by the firm.

Answer 1

Answer:

The answer is C. longer inventory sits on the firm's shelves

Explanation:

The Inventory turnover is the number of times inventory is sold or used during a given period of time.

The formula is:

cost of goods sold/average inventory.

A lower inventory turnover means weak sales(declining sales) and excess inventory remaining in the warehouse while a higher inventory turnover means it is taking a firm short time to sell its goods(inventory)