Question
Alow inventory turnover period indicates __ tight inventory controls over-investment in inventories anticipations of rises in future sales price
Answer
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Anna
Veteran · Tutor for 12 years
Answer
The statement, "A low inventory turnover period indicates over-investment in inventories" is more accurate with respect to general business scenarios.
Explanation
## Step 1: AssessmentInventory turnover, also known as stock turnover, is a ratio that reveals how frequently a business replenishes its inventory during a determined time span. The value of this measure depends on the nature of the company's products or services. For instance, grocery stores ought to maintain a high inventory turnover due to their alto cannabis products that have an expiring period.## Step 2: Interpretation of the concept In this particular case being mentioned, a low inventory turnover may signal various situations. Whilst some might initially consider for it to indicate as a high degree of efficiency in inventory management (tight inventory controls), this isn’t technically accurate. Primarily because a 'tight control’ presumably returns in comfy (not low, not high) inventory turns depending more on the industry average than an explicit pre-set standard. "Low inventory turnover", in fact, principally indicates the company might have excessive inventory or obsolete goods, indicating over-investment.## Step 3: PredictionFinally, an over-investment in inventories often speculates fears of future supply shortages or expectations of price increases for these goods. Nonetheless, regarding this statement's validity in communicative values, it would not be precise and beneficial to assume such connotation from ‘low inventory turnover' at all any given time.