Which of the Following Statements Does Not Describe the Trade-Offs

question 45

Multiple Choice

Which of the following statements does not describe the trade-offs that buyers should consider for merchandise assortment planning?

• A) Increasing sales by offering more breadth and depth can potentially reduce inventory turnover.
• B) Increasing sales by offering more breadth and depth can potentially reduce GMROI by having more stock-keeping units (SKUs).
• C) Increasing breadth and depth can increase the need to put more merchandise on sale and thus negatively affect the gross margin.
• D) SKU rationalization programs can help in increasing inventory turnover without reducing sales.
• E) The more SKUs offered, greater the chance of breaking sizes-running out of a specific size SKU.

---

Definitions:

Dividends

Payments made by a corporation to its shareholder members, usually as a distribution of profits.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to reflect cash transactions.

Comparative Balance Sheets

Financial statements that present the assets, liabilities, and shareholders' equity of a company at different points in time for comparison.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was put into use.