Question: please give correct option with explanation Otherwise downvote. Select one that is a WRONG interpretation of the inventory turnover ratios in the below table. Company
please give correct option with explanation Otherwise downvote.

Select one that is a WRONG interpretation of the inventory turnover ratios in the below table. Company A Company B |Company C Cost of Goods Sold ($million) 10 10 5 Avg. Inventory Cost ($million) 2 5 5 Inventory Turnover Ratio 5 2 Days of Inventory (days) 72 182.5 365 If A had more inventory, it could sell more goods. O Since A and B spent the same cost of goods, the higher turnover ratio of A indicates its stronger sales. Chad the longest days of inventory, and possibly it generated a relatively high average inventory cost. Since A's turnover ratio is over 4, it is inventory velocity is too fast. A spent less inventory cost than B as A held the inventory for shorter days. Conceptually, A cleared up its inventory 5 times a year.Select one that is a WRONG interpretation of the inventory turnover ratios in the below table. Company A Company B |Company C Cost of Goods Sold ($million) 10 10 5 Avg. Inventory Cost ($million) 2 5 5 Inventory Turnover Ratio 5 2 Days of Inventory (days) 72 182.5 365 If A had more inventory, it could sell more goods. O Since A and B spent the same cost of goods, the higher turnover ratio of A indicates its stronger sales. Chad the longest days of inventory, and possibly it generated a relatively high average inventory cost. Since A's turnover ratio is over 4, it is inventory velocity is too fast. A spent less inventory cost than B as A held the inventory for shorter days. Conceptually, A cleared up its inventory 5 times a year
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
