Question

Positive unplanned inventory investment occurs when actual:

a. depreciation is less than expected.
b. sales are less than expected.
c. depreciation is more than expected.
d. sales are higher than expected.

Answer 1

The correct answer is letter "B": sales are less than expected.

Step-by-step explanation:

Unplanned inventory investment is positive in case there is an excess of supply of goods, meaning the level of sales has not met the expectations of the company. On the other hand, if unplanned inventory investment is negative, there is an excess of demand for goods which represents sales met the projections of the company and it must find a way to increase the supply.