Why Would a Slow Inventory Turnover Rate Be a Red

question 92

Multiple Choice

Why would a slow inventory turnover rate be a red flag in a financial statement analysis?

• A)The company may have obsolete inventory.
• B)The company may have bad salespeople.
• C)The company may be overstating inventory.
• D)Both A and C are reasons why it would be a red flag.

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Definitions:

Retailer

A business or person that sells goods directly to consumers, typically operating from a physical or online store.

National Brand

Products or services that are marketed under a manufacturer's branding and distributed across an entire country, distinct from private labels or local brands.

Private-label Brand

Products manufactured by one company for sale under another company's brand, typically offered as lower-cost alternatives to national brands in retail stores.

National Brand

A brand that is marketed and recognized across an entire country, offering a consistent product or service quality and experience.