Which factor is most directly associated with higher inventory turnover?

Which factor is most directly associated with higher inventory turnover?

• A. Longer product life cycles
• B. Increased Sales
• C. Lower unit costs
• D. Higher advertising budgets

Answer: (B)

Inventory turnover measures how quickly inventory is sold and replaced in a given period. The factor that most directly pushes turnover up is increased sales, because selling more units in the same time frame converts more stock into revenue and raises the cost of goods sold relative to the average inventory. In turn, that boosts the turnover ratio. The other factors influence demand or margins more indirectly: longer product life cycles tend to leave items on shelves longer, lower unit costs affect profitability rather than speed of movement, and advertising can raise demand but isn’t as immediate a driver of stock movement as actual sales volume.

Inventory turnover measures how quickly inventory is sold and replaced in a given period. The factor that most directly pushes turnover up is increased sales, because selling more units in the same time frame converts more stock into revenue and raises the cost of goods sold relative to the average inventory. In turn, that boosts the turnover ratio. The other factors influence demand or margins more indirectly: longer product life cycles tend to leave items on shelves longer, lower unit costs affect profitability rather than speed of movement, and advertising can raise demand but isn’t as immediate a driver of stock movement as actual sales volume.