Accounting for IGCSE & O level - Advanced Principles (Section 5 - No. 10)
What does the text say regarding the relationship between inventory turnover ratio and profitability?
High inventory turnover always increases profitability.
Low inventory turnover always increases profitability.
Increasing the inventory turnover will reduce inventory turnover and profit margins.
Increasing the inventory turnover will improve inventory turnover and profit margins.
Explication
Increasing inventory turnover will reduce inventory turnover and profit margins.