Final answer:
The purpose of channel stuffing is not to fill customer orders but to inflate sales figures by pushing excess inventory onto distributors and retailers, often resulting in future financial issues when the unsold inventory has to be discounted or written off.
Step-by-step explanation:
The statement that the purpose of channel stuffing is to ensure that all customer orders are properly filled before the end of the seller's fiscal year is false.
Channel stuffing refers to the business practice where a company inflates its sales figures by coercing or incentivizing distributors and retailers to purchase more products than they can promptly sell. This is done especially towards the end of a financial period to make the company's financial health appear better than it actually is, often leading to a temporary boost in the stock price. This unethical practice can lead to distributors and retailers having excess inventory that they cannot sell within a reasonable timeframe.
Channel stuffing is consequently harmful as eventually unsold products will need to be heavily discounted or written off, resulting in a financial backlash in subsequent periods.