Accounting for IGCSE & O level - Advanced Principles (Section 5 - No. 37)
If a company experiences a decrease in its inventory turnover ratio, what could this suggest?
The company is selling inventory more slowly.
The company is managing inventory more efficiently.
The company's sales are increasing.
The company has a higher level of profitability.
Explication
A lower ratio means the inventory is not turning over as quickly.