Final answer:
Inventory turnover ratios differ between companies in the same industry due to variations in product cost and sales frequency. Lower-cost goods typically lead to higher turnover, while fewer higher-cost goods may result in lower turnover. Industry standard measures like concentration ratios do not fully account for individual company strategies.
Step-by-step explanation:
Inventory turnover ratios may vary significantly between companies in the same industry due to a number of factors. Some companies may sell more lower-cost goods, which can lead to a higher inventory turnover ratio as these goods are sold more frequently. On the other hand, some companies may sell fewer higher-cost goods, which can lead to a lower inventory turnover ratio because these high-value items are often sold less frequently.
It is important to note that companies in the same industry will not always have the same inventory turnover ratios, as the ratios are influenced by various factors unique to each company, such as sales strategies, product mix, and market positioning. Additionally, industry-wide metrics like the four-firm concentration ratio and the Herfindahl-Hirschman index, which measure market concentration, may not fully account for these individual company differences. Antitrust regulators have recognized that these metrics have limitations and have adapted their approach to better consider the specific context of each industry and merger situation.