Since Inventory Is a Significant Current Asset for Most Retail

question 128

True/False

Since inventory is a significant current asset for most retail organizations, the inventory turnover ratio would be of significance to investors and analysts in terms of assessing liquidity.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity and operational efficiency.

Carrying Costs

Expenses associated with holding or storing inventories, including warehousing, insurance, and spoilage costs.

Cash Inflows

The total amount of money being transferred into a business, often from operations, investments, or financing.

Net Working Capital

The difference between a company’s current assets and current liabilities, indicating its short-term financial health and ability to cover short-term liabilities.