Inventory Turned Over 7 Times During the Year at Rockdale

question 141

Multiple Choice

Inventory turned over 7 times during the year at Rockdale Electronics.Similar electronics retailers have an inventory turnover equal to 12 times per year.Which of the following best explains the state of Rockdale's inventory management?

• A) The company sold too much inventory during the year.
• B) The company needs to increase sales and decrease the amount of inventory on hand.
• C) The company is performing much better than its competitors.
• D) The company should increase the amount of goods on hand to accommodate the growth in inventory demand.

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Definitions:

Pure Competition

A market structure in which a very large number of firms sells a standardized product, into which entry is very easy, in which the individual seller has no control over the product price, and in which there is no nonprice competition; a market characterized by a very large number of buyers and sellers.

Equivalents

Items or entities that are fundamentally equal in value or function in the context of a specific comparison.

Profit-maximizing

The process or methodology by which a business seeks to find the best output and sales levels to achieve the highest profits possible.

Marginal Revenue Product

The extra income produced by using an additional unit of a resource, like labor or capital.