At Chips and Dips,a Local Convenience Market,an Increase in the Inventory

question 3

Multiple Choice

At Chips and Dips,a local convenience market,an increase in the inventory turnover ratio would indicate which of the following?

• A)It is at risk of holding too much inventory.
• B)It is more likely to face a cash flow problem.
• C)It is selling its stock of merchandise more quickly.
• D)It is relying heavily on credit sales.

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Definitions:

Cost of Goods Sold

Expenses directly linked to the creation of a company's sold products.

Sales

Sales refer to the transactions where goods or services are exchanged for money, representing the primary source of revenue for most businesses.

Receivables Period

The average time a business spends waiting for its customers to settle their dues.

Credit Sales

Sales for which payment is not received immediately, but the buyer is extended credit to pay at a later date, affecting a company's cash flow and revenue recognition.