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True or False Often, a company with a lower gross profit percentage has a faster inventory turnover

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Final answer:

True, companies with lower gross profit percentages often have faster inventory turnovers due to competitive pricing leading to higher sales volume, although other factors also influence this outcome.

Step-by-step explanation:

True or False: Often, a company with a lower gross profit percentage has a faster inventory turnover.

This statement is generally True. A lower gross profit percentage could indicate that the company is pricing its products lower than its competitors, which can lead to increased sales volume and thus, a faster inventory turnover. Inventory turnover is a measure of how quickly a company sells and replaces its stock of goods during a certain period. Companies with lower gross profit percentages can have a competitive pricing strategy that stimulates quick sales, replenishing inventory more frequently.

However, this is not a rule, as other factors can affect inventory turnover, such as the type of industry, market conditions, and company efficiency in managing inventory.

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