Primary Reasons to Hold Inventory Include All of the Following

question 39

Multiple Choice

Primary reasons to hold inventory include all of the following EXCEPT

• A) to achieve economies of scale.
• B) to protect against anticipated changes in demand or supply.
• C) to decrease inventory turnover ratio.
• D) to provide for transit.

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Definitions:

Low Collateral Value

Low collateral value refers to assets that have declined in worth, offering less security for loans and reducing borrowing capacity.

Credit Scoring

A system used by lenders to evaluate the creditworthiness of potential borrowers, resulting in a score that predicts the likelihood of repayment.

Probability of Default

The probability that a borrower will fail to fulfill their debt responsibilities.

Credit Policy

The guidelines a company follows to determine the amount and terms of credit to extend to customers.