Question

A rising inventory account balance and falling inventory turnover ratio implies that inventory is building up because the inventory is not selling as fast as it used to. True or False?

Answer 1

A rising inventory account balance and falling inventory turnover ratio imply that inventory is building up because it is not selling as fast as it used to.

Step-by-step explanation:

The statement is True. A rising inventory account balance and falling inventory turnover ratio indicate that inventory is building up because it is not selling as fast as it used to. Inventory turnover ratio is a measure of how quickly a company sells its inventory, and a declining ratio suggests that the inventory is not moving off the shelves as quickly as before.