XYZ Company Has an Inventory Turnover of 20 Times Per

question 44

Multiple Choice

XYZ Company has an inventory turnover of 20 times per year.The industry average is 5.0 times per year.What does a high inventory turnover mean?

• A)The company has too much inventory on hand.
• B)The company may have obsolete inventory on hand.
• C)The company may not be keeping enough inventory on hand which can lead to lost sales.
• D)The company is having a difficult time selling the inventory.

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Definitions:

Put Options

Financial contracts that give the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Call Options

Financial derivatives that give the buyer the right, but not the obligation, to buy a stock or other financial asset at a specified price within a specific time frame.

Strike Price

The strike price is the fixed price at which the holder of an option can buy (in the case of a call) or sell (in the case of a put) the underlying security or commodity.

LEAPS

Long-Term Equity Anticipation Securities, which are options contracts with expiration dates longer than one year, providing a long-duration investment or hedging opportunity.