Indicate whether each of the following statements about financial statement analysis is true or false.Having too little inventory can hurt a company's profitability because of lost sales.Having too much inventory can hurt a company's profitability because of excess costs.Generally, a lower inventory turnover indicates that merchandise is being handled more efficiently.Average days to sell inventory is the number of times, on average, that inventory is replaced during the year.Values for the inventory turnover ratio vary widely among different industries.
What will be an ideal response?
Having too little inventory can hurt a company's profitability because of lost sales. T
Having too much inventory can hurt a company's profitability because of excess costs. T
Generally, a lower inventory turnover indicates that merchandise is being handled more efficiently. F
Average days to sell inventory is the number of times, on average, that inventory is replaced during the year. F
Values for the inventory turnover ratio vary widely among different industries. T
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